A Global Analysis of Private Investments in Public Equity

Andriosopoulos, Dimitris and Panetsidou, Styliani (2018) A Global Analysis of Private Investments in Public Equity. Working paper. University of Strathclyde, Glasgow.

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    Abstract

    Raising equity capital via Private Investments in Public Equity (PIPEs) has been rising in popularity matching Seasoned Equity Offerings. We use over 10,000 PIPEs in a global setting (37 countries) during 1995-2015 to assess how institutional characteristics 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 and negative long-term performance globally. Finally, consistent with the law and finance literature, we show that country governance matters, as issuing firms operating in countries with better regulatory quality and higher law enforcement outperform others.