Empirical Analysis On The Influence Of The Warrants And The Underlying Stocks

In the background of non-tradable share reform, warrants issued trading inthe warrants market, as a tool for the price of non-tradable shareholders totradable shareholders. Indicates the re-development of the warrants marketwhich forced to close in1996. As a kind of financial derivatives, equipped witha sophisticated securities market functions, it have been recognized the warrantsin favor of underlying stock rised in price and reduced in risk. The warrantsmarket in our counrtry have development several years, that worth to study is itconsistent with theoretical.In the paper, Firstly elaborate the theory of the issue and expiration effectof warrants, Price pressure hypothesis、Risk attitude hypothesis、The completemarket、Information transfer、The definition and classification of warrant anddue trade. secondly take the warrants list from2005as sample, use empiricalstudy whether warrants listing and have impanct on underlying stocks’ pricesand risk. the main conclusions are as follows:(1) There dosen’t existoutstanding positive price and risk effect on the underlying stocks when the callwarrant issued.(2) some time ago when the put warrants issued there is rise inprice of the underlying stocks, but this trend isn’t conspicuous,as the put warrantissued,the system risk of underlying stocks is weakened.(3)There dosen’t existeffect on the system risk of underlying stocks when the warrants expired.All in all, by reason that the warrants market is established again innon-tradable share reform、the trade systems and circulation of the warrant, it doesn’t play a role that stabilize the underlying markets, for example, rised priceand reduced risk of the underlying stock. So it is necessary to adopt newmessures to perfect the warrants market, like developing new financialderivative products、 perfecting the trade systems、 strengthening investoreducation and supervise.