Balachandran, Balasingham and Kanapathipillai, Sutharson and Krishnamurti, Chandrasekhar and Theobald, Michael and Velayutham, Eswaran 
ORCID: https://orcid.org/0000-0003-2492-5668
(2009)
Why do Australian firms issue standalone warrants?
In: Inaugural Finance and Corporate Governance Conference (FCGC 2010), 7-9 Apr 2010, Melbourne, Australia.
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Abstract
This paper examines why Australian firms issue standalone warrants and how the market perceives this type of capital raising method. We find that firms with smaller size, smaller issue proceeds, higher risk and lower ownership concentration choose standalone warrants rather than rights issues of equity to raise equity capital. Price reactions to standalone warrant announcements are significantly and positively related to takeup and underwriting status consistent with the findings of Balachandran, Faff and Theobald (JFE, 2008) for the announcements of rights issues of equity.
Price reactions are stronger for moderately out-of-the-money warrants than in-the-money and deeply out-of-the-money warrants. We also find that managers of larger/moderate/smaller firms with higher/moderate/lower pre-event RUNUP and lower/moderate/higher risk choose in-themoney/moderately-out-of-the-money/deeply out-of-the money warrants.
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