The Effects Of Structured Warrants On Firm Performance In Malaysia: The Role Of Institutional Ownership
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Date
2017-07
Authors
Yip, Yen Yen
Journal Title
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Volume Title
Publisher
Universiti Sains Malaysia
Abstract
This research is motivated to explore whether the existence of structured warrants creates any value to its underlying firms in both short-run and long-run based on the Malaysian structured warrants market. The time frame of this study covers year 2006 until 2014. In order to gauge the short-run impact, the analysis concerning the impact of structured warrants listing on the behaviour of its underlying stocks is performed based on the event study and dummy variable methodology. The findings reveal that the return of the underlying stocks has increased significantly surrounding the event of structured warrants listing, however, no abnormal return is being detected. Meanwhile the results also show the trading volume of the underlying stocks has experienced an upsurge while the spot price volatility is found to have significantly lower in the post-event period. Also, the gap of bid-ask spread has become relatively smaller subsequent to structured warrants initiation even though the impact is less significant. Overall, the market quality of the underlying stocks has improved in short-run due to the availability of structured warrants. In order to gauge the impact in long-run, this research examines whether the existence of structured warrants is associated with firm performance by using stock return as the performance indicator. For the first time, the institutional ownership is being considered as the factor which is able to enhance the relationship between structured warrants and firm performance. Also, in this research, institutional ownership is further segregated into foreign and domestic category with the objective to determine whether the identity of institutional owners matters in improving connection between structured warrants and firm performance.
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Keywords
The effects of structured warrants on firm performance , the role of institutional ownership