Stock Price Management and Share Issuance: Evidence from Equity Warrants

ABSTRACT We investigate whether firms manage stock prices in anticipation of share issuance. Warrant exercise results issuance and warrant expiration dates are fixed years advance, which precludes market timing. predict to prevent (induce) when is dilutive (anti-dilutive) existing shareholders. To test our prediction, we examine returns around dates. find that the difference between out-of-the-money (OTM) in-the-money (ITM) firms' return patterns (i.e., post-expiration minus pre-expiration returns) positive, OTM pattern positive (negative). Return three sets pseudo differ from firms. stronger more feasible price changes required affect status, firm-issued news items a mechanism for management. Thus, findings provide evidence engage management JEL Classifications: G14; G15; G32; M41.