Death spiral PIPEs: a reconsideration of the evidence

Karen Benson, Martina Linnenluecke*, David Morrison, Sviatoslav Rosov

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


We challenge the view that PIPEs lead to unfavourable outcomes for issuing firms. We show that structured PIPEs do not have significant negative CARs when a matched firm benchmark is used for computing CARs and when sample selection bias is taken into account. Indeed, structured PIPEs have significantly higher positive skewness, indicating superior optionality, consistent with the real option argument. We also show that the 2002 intervention by the Securities and Exchange Corporation (SEC) has led to unintended consequences, with the substitution of ‘mom and pop’ investors for hedge fund investors in the structured PIPE market.

Original languageEnglish
Pages (from-to)4175-4194
Number of pages20
JournalAccounting & Finance
Issue number4
Early online date10 Sept 2019
Publication statusPublished - Dec 2020


  • Cumulative abnormal returns
  • Matched firm benchmark
  • Private investments in public equity
  • Securities and exchange commission
  • Structured PIPEs


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