Completely predictable and fully anticipated? Step ups in warrant exercise prices

Luis Garcia-Feijóo, John S. Howe, Tie Su

Research output: Contribution to journalArticle


Some warrants are issued with a scheduled increase in their exercise price. This increase, referred to as a 'step up' in exercise price, occurs after the warrant is issued but prior to its expiration. The price behaviour of warrants and common stock at the scheduled step up date is examined. The evidence suggests that the market correctly anticipates this event, and that warrant holders exercise (actually, refrain from exercising) rationally.

Original languageEnglish (US)
Pages (from-to)561-565
Number of pages5
JournalApplied Economics Letters
Issue number9
StatePublished - Jul 15 2005


ASJC Scopus subject areas

  • Economics and Econometrics

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