This PhD thesis, comprised of 3 essays, assesses the activity of Private Investments in Public Equity (PIPEs) and provides new insights on PIPEs behaviour. In the second chapter, I document PIPEs performance around the world and assess whether cross-country regulatory and institutional differences can explain the variation in PIPEs valuation. I document a significant decline in the market valuation around the announcement of PIPEs, especially from 2004 to 2015 and find that firms participating in the PIPE market during these years have worse fundamentals in terms of size, profitability and operating performance. I further find that PIPE issuers are followed by a significant long-term underperformance globally. Finally, consistent with the Law and Finance theory, I show that country governance quality matters, as issuing firms operating in countries with better regulatory quality and higher law enforcement outperform others. In the third chapter, I examine the stock returns and volume prior to PIPE announcements, to document whether there is a price run ahead of the public announcement of the issues. Focusing in the UK and the US, that both have high levels of PIPE activity but differ in the PIPE regulatory environment and insider trading treatment, I assess whether the price run patterns are affected by regulatory differences. In addition, assessing the contemporaneous relationship between abnormal returns and volume, I examine whether the price runs can be explained by leaked information. I find abnormal returns and abnormal volume prior to the announcement of PIPEs in both markets. I further find support of the information leakage hypothesis for US issuers. In the fourth chapter, I assess registered insider trades around PIPEs in the UK. I examine whether insiders adjust their trading strategies before the PIPE issue. I find that insiders significantly increase their net sales in the pre-announcement PIPE period, with the results being robust after controlling for time effects and comparing with a matched sample of control firms.
|Date of Award||25 Feb 2018|
- University Of Strathclyde
|Sponsors||University of Strathclyde|
|Supervisor||Dimitris Andriosopoulos (Supervisor) & Leilei Tang (Supervisor)|