Abstract
Raising equity capital via Private Investments in Public Equity (PIPEs) has been rising in popularity, matching Seasoned Equity Offerings (SEOs). We use over 10,000 PIPEs in a global setting during 1995–2015 to assess how and through which channels institutional frameworks affect the issuers' performance. We document a significant decline in the market reaction, especially during 2004–2015 and find that firms issuing equity via PIPEs have significantly worse fundamentals. We also show that country governance matters as issuing firms operating in countries with better regulatory environments outperform others. Finally, we find that regulatory enforcement is a plausible underlying channel for the positive effect of the institutional frameworks on PIPEs performance.
| Original language | English |
|---|---|
| Article number | 101832 |
| Number of pages | 25 |
| Journal | Journal of Corporate Finance |
| Volume | 69 |
| Early online date | 5 Jan 2021 |
| DOIs | |
| Publication status | Published - Aug 2021 |
Bibliographical note
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Keywords
- Private Investment in Public Equity (PIPE)
- Stock performance
- Cross-country
- Institutional frameworks
- regulatory quality
- Enforcement
- Regulations
- MiFID
- Institutional frameworks, Regulatory quality
ASJC Scopus subject areas
- Economics and Econometrics
- Business and International Management
- Finance
- Strategy and Management