Return and risk in initial public offerings of both shares and warrants

Shmuel Hauser, Azriel Levy

Research output: Contribution to journalArticlepeer-review

4 Scopus citations


In the past few years there has been an increasing number of new issues of shares of common stock together with warrants intended to raise interest in initial public offerings of relatively young, growing firms. In this study we examine the pricing efficiency of stocks and warrants offered simultaneously to the public as a single unit. We present a model for evaluating the warrants in such offerings and test it empirically against data from the Tel-Aviv Stock Exchange, where such offerings have become standard. We find that the issued units are usually undervalued, allowing for significant abnormal positive returns. But, while the warrants are usually underpriced, the stocks are overpriced. Largely consistent with the evidence from other financial markets around the world, we also find abnormal negative rates of return in the long run.

Original languageEnglish
Pages (from-to)29-43
Number of pages15
JournalReview of Quantitative Finance and Accounting
Issue number1
StatePublished - 1 Jan 1996
Externally publishedYes


  • Initial public offerings
  • Return
  • Risk
  • Shares
  • Warrants

ASJC Scopus subject areas

  • Accounting
  • General Business, Management and Accounting
  • Finance


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