Abstract
Warrants are sometimes granted to underwriters in initial public offerings as part of the compensation for their services. We examine the effects of underwriter warrants in a sample of firm commitment offerings from 1983 through 1987. These warrants represent a significant component of the compensation to the underwriter and are associated with greater total costs of going public. Warrants appear to provide a mechanism for circumventing otherwise binding regulatory constraints, allowing issuers to offer extra compensation to underwriters marketing especially risky offerings.
Original language | English (US) |
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Pages (from-to) | 113-135 |
Number of pages | 23 |
Journal | Journal of Financial Economics |
Volume | 29 |
Issue number | 1 |
DOIs | |
State | Published - Jan 1 1991 |
All Science Journal Classification (ASJC) codes
- Accounting
- Finance
- Economics and Econometrics
- Strategy and Management