Underwriter warrants, underwriter compensation, and the costs of going public

Christopher B. Barry, Chris J. Muscarella, Michael R. Vetsuypens

Research output: Contribution to journalArticlepeer-review

62 Scopus citations


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 languageEnglish (US)
Pages (from-to)113-135
Number of pages23
JournalJournal of Financial Economics
Issue number1
StatePublished - Jan 1 1991

All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance
  • Economics and Econometrics
  • Strategy and Management


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