TY - JOUR
T1 - A global analysis of private investments in public equity
AU - Andriosopoulos, Dimitris
AU - Panetsidou, Styliani
PY - 2021/1/5
Y1 - 2021/1/5
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
KW - regulatory quality
KW - enforcement
KW - regulations
KW - MiFID
U2 - 10.1016/j.jcorpfin.2020.101832
DO - 10.1016/j.jcorpfin.2020.101832
M3 - Article
JO - Journal of Corporate Finance
JF - Journal of Corporate Finance
SN - 0929-1199
M1 - 101832
ER -