A global analysis of Private Investments in Public Equity

Dimitris Andriosopoulos; Styliani Panetsidou

doi:10.1016/j.jcorpfin.2020.101832

A global analysis of Private Investments in Public Equity

Dimitris Andriosopoulos
, Styliani Panetsidou

University of Strathclyde

Research output: Contribution to journal › Article › peer-review

15 Citations (Scopus)

451 Downloads (Pure)

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	https://doi.org/10.1016/j.jcorpfin.2020.101832
Publication status	Published - Aug 2021

Bibliographical note

© 2020, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/

Copyright © and Moral Rights are retained by the author(s) and/ or other copyright owners. A copy can be downloaded for personal non-commercial research or study, without prior permission or charge. This item cannot be reproduced or quoted extensively from without first obtaining permission in writing from the copyright holder(s). The content must not be changed in any way or sold commercially in any format or medium without the formal permission of the copyright holders.

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

Access to Document

10.1016/j.jcorpfin.2020.101832

Post-PrintAccepted author manuscript, 1.04 MBLicence: CC BY-NC-ND

Cite this

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title = "A global analysis of Private Investments in Public Equity",

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.",

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note = "{\textcopyright} 2020, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/ Copyright {\textcopyright} and Moral Rights are retained by the author(s) and/ or other copyright owners. A copy can be downloaded for personal non-commercial research or study, without prior permission or charge. This item cannot be reproduced or quoted extensively from without first obtaining permission in writing from the copyright holder(s). The content must not be changed in any way or sold commercially in any format or medium without the formal permission of the copyright holders. ",

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AU - Panetsidou, Styliani

N1 - © 2020, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/ Copyright © and Moral Rights are retained by the author(s) and/ or other copyright owners. A copy can be downloaded for personal non-commercial research or study, without prior permission or charge. This item cannot be reproduced or quoted extensively from without first obtaining permission in writing from the copyright holder(s). The content must not be changed in any way or sold commercially in any format or medium without the formal permission of the copyright holders.

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N2 - 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.

AB - 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.

KW - Private Investment in Public Equity (PIPE)

KW - Stock performance

KW - Cross-country

KW - Institutional frameworks

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KW - Enforcement

KW - Regulations

KW - MiFID

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JO - Journal of Corporate Finance

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M1 - 101832

ER -

A global analysis of Private Investments in Public Equity

Abstract

Bibliographical note

Keywords

ASJC Scopus subject areas

Access to Document

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Cite this