Although unit initial public offering (IPO) firms reserve the right to amend the original terms of their warrants, only some choose to extend the exercise period, lower the exercise price, or both. We examine the extent of warrant amendment among unit IPOs and find that the decision to amend is...

Underwriter compensation can be structured as all cash or a combination of cash and warrants. Using a sample of small initial public offerings (IPOs), we find that underwriter compensation contracts that include warrants in exchange for cash can serve as certification for IPO firms by...

In this paper, we test Chemmanur and Fulghieri's (1997) predictions regarding a unit IPO firm's choice of signaling mix as a function of firm riskiness. We find evidence that both the proportion of firm value sold as warrants and the percentage of underpricing is increasing in firm riskiness....

While the vast majority of underwriters charge a gross spread of exactly 7%, as documented in Chen and Ritter (2000), more than a third charge something other than 7%. Among offerings of $50 million and below where underwriters charge the firm other than 7%, two-thirds of issuers pay more than...

We study the long-term stock performance of initial public offerings (IPOs). We examine how past performance affects the board of directors’ stability and how changes in boards affect subsequent performance. We introduce a dynamic, scale invariant stability metric to measure such changes. Our...

Options, often issued to the underwriter of unit IPOs, provide an interesting application of exotic option valuation. These options, which are generally for a unit or bundle of share(s) and warrant(s), are usually redeemable so that the underwriter option on the unit represents an up and out...