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Abstract
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 language | English |
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Pages (from-to) | 4175-4194 |
Number of pages | 20 |
Journal | Accounting & Finance |
Volume | 60 |
Issue number | 4 |
Early online date | 10 Sept 2019 |
DOIs | |
Publication status | Published - Dec 2020 |
Keywords
- Cumulative abnormal returns
- Matched firm benchmark
- Private investments in public equity
- Securities and exchange commission
- Structured PIPEs
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Dive into the research topics of 'Death spiral PIPEs: a reconsideration of the evidence'. Together they form a unique fingerprint.Projects
- 1 Finished
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Australia's Climate Strategy and Positioning for the Clean Tech Revolution
Smith, T., Linnenluecke, M. & Whaley, R.
1/11/17 → 31/12/20
Project: Research