The financing decisions of REITs: The case of warrant extensions |
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Authors: | John S Howe Peihwang Wei |
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Institution: | (1) Department of Finance, Louisiana State University, 2163 CEBA, 70803 Baton Rouge, LA;(2) Department of Economics and Finance, University of New Orleans, 70148 New Orleans, LA |
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Abstract: | In this paper, we examine the warrant price and stock price reactions to the announcement of warrant life extensions by REITs. As predicted by option pricing theory, warrant prices increase in response to these extensions. The stocks of REITs making the extension announcements experience average abnormal returns that are not significantly different from zero. Thus, total firm value appears to increase, with the gains accruing primarily to the warrantholders. |
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Keywords: | REITs warrants financing |
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