UNIT INITIAL PUBLIC OFFERINGS - A FORM OF STAGED FINANCING

Units are bundles of common stock and warrants. By selling initial pub lic offerings (IPOs) of units, firms precommit to sell more stock in t he future at the warrant's exercise price. Sequential offerings of thi s type reduce the agency costs of giving management a potential free c ash now at the IPO. Consistent with this theory, firms that choose uni t IPOs are smaller, have less income and assets in relation to their I PO proceeds. and are less likely to survive than firms that issue shar es.