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Korean J Financ Stud > Volume 48(2); 2019 > Article
Korean Journal of Financial Studies 2019;48(2):129-155.
DOI: https://doi.org/10.26845/KJFS.2019.04.48.2.129    Published online April 30, 2019.
Refixing Option and Privately-Placed BW Warrant Returns
Pyung Sig Yoon
리픽싱옵션과 사모 분리형 BW 신주인수권 수익률의 추정
윤평식
충남대학교
Abstract
This paper examines 249 privately-placed bonds with warrants (BWs) where the related parties including largest shareholders purchase warrants from financial institutions. The major findings of this paper are as follows. First, the announcement effect is significantly negative. Second, the average return of exercising warrants is 1,441%. Out of this return, 674% is attributable to the refixing option. Third, the largest shareholders are able to select the best exercise timing due to information advantage. The cumulative abnormal return of 100 days prior to the exercise date is 29.32%. Fourth, the market reacts negatively when warrants are exercised. Korea is the only country where privately-placed BWs are issued with the refixing option. This paper presents evidence that warrant returns are extremely high due to the refixing option, thus we make a feasible recommendation that the benefit of the option is reduced or a different refixing range of the exercise price is applied in public or private placements.
Key Words: 사모 신주인수권부사채,신주인수권행사,리픽싱옵션,신주인수권 환매,투자수익률,Privately-Placed Bond with Warrant,Warrant Exercise,Refixing Option,Warrant Buyback,Warrant Returns
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