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Matching Financial And Real Investment Options: Evidence From Warrant Calls


  • Luis Garcia-Feijóo
  • John S. Howe


We provide new evidence on the sequential financing explanation for the use of warrants. Consistent with sequential financing, capital spending starts increasing in the year of the call and peaks three years after the call. In addition, both equity and debt financing increase significantly in the year of the call and remain at high levels. Warrant contract features-the exercise price and the presence or absence of a price condition for callable warrants-are also consistent with the sequential financing hypothesis. 2005 The Southern Finance Association and the Southwestern Finance Association.

Suggested Citation

  • Luis Garcia-Feijóo & John S. Howe, 2005. "Matching Financial And Real Investment Options: Evidence From Warrant Calls," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 28(4), pages 609-620.
  • Handle: RePEc:bla:jfnres:v:28:y:2005:i:4:p:609-620

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