The financing decisions of REITs: The case of warrant extensions

  • John S. Howe
  • Peihwang Wei
Article
  • 42 Downloads

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.

Key words

REITs warrants financing 
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Copyright information

© Kluwer Academic Publishers 1994

Authors and Affiliations

  • John S. Howe
    • 1
  • Peihwang Wei
    • 2
  1. 1.Department of FinanceLouisiana State UniversityBaton Rouge
  2. 2.Department of Economics and FinanceUniversity of New OrleansNew Orleans

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