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Why do Companies Include Warrants in SeasonedEquity Offerings: The case of French Unit Offerings

Author

Listed:
  • Edith Ginglinger

    (DRM - Dauphine Recherches en Management - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique)

  • Jean-François Gajewski
  • Meziane Lasfer

Abstract

We analyze the reasons why companies issue units when they raise additional capital. We find that, incontrast to previous evidence, units are not offered to mitigate the agency conflicts or to signal securitymispricing as they are predominantly issued during cold periods, in public rather than in rights offerings, andwhen the issue is underwritten. In addition, the results indicate that companies choose to offer units to increasetheir offer price flexibility and to underprice their seasoned equity offering so as to minimize the issue cost and the risk of failure of the issue. These results provide support for the net proceeds maximization hypothesis.

Suggested Citation

  • Edith Ginglinger & Jean-François Gajewski & Meziane Lasfer, 2005. "Why do Companies Include Warrants in SeasonedEquity Offerings: The case of French Unit Offerings," Post-Print halshs-00149205, HAL.
    • Handle: RePEc:hal:journl:halshs-00149205
    as

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