A Global Analysis of Private Investments in Public Equity

49 Pages Posted: 21 Oct 2018

See all articles by Dimitris Andriosopoulos

Dimitris Andriosopoulos

Strathclyde Business School

Styliani Panetsidou

University of Strathclyde - Department of Accounting and Finance

Date Written: September 27, 2018

Abstract

This study examines the performance of firms issuing Private Investments in Public Equity (PIPEs) on a global setting and assesses how cross-country institutional characteristics affect the performance of PIPE issuers. We document a significant decline in the market valuation around the announcement of PIPE issues especially from 2004 to 2015 and find that firms participating in the PIPE market have worse fundamentals in terms of size, profitability and operating performance. We further find that PIPE issuers are followed by a significant negative long-term performance with this evidence being robust globally. Finally, consistent with law and finance theory that associates institutional quality with higher valuations, we show that country governance quality matters, as issuing firms operating in countries with better regulatory quality and higher law enforcement outperform others.

Keywords: Private Investment in Public Equity (PIPE), stock performance, cross-country differences, corporate governance, regulation

JEL Classification: G15, G18, G38

Suggested Citation

Andriosopoulos, Dimitris and Panetsidou, Styliani, A Global Analysis of Private Investments in Public Equity (September 27, 2018). Available at SSRN: https://ssrn.com/abstract=3256202 or http://dx.doi.org/10.2139/ssrn.3256202

Dimitris Andriosopoulos

Strathclyde Business School ( email )

199 Cathedral Street
Department of Accounting and Finance
Glasgow, G4 0QU
United Kingdom
+44(0)1415483892 (Phone)

HOME PAGE: http://www.strath.ac.uk/staff/andriosopoulosdimitrisdr/

Styliani Panetsidou (Contact Author)

University of Strathclyde - Department of Accounting and Finance ( email )

199 Cathedral St.
Stenhouse Wing
Glasgow, G4 0QU
United Kingdom

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