Monitoring via Staging: Evidence from Private Investments in Public Equity

51 Pages Posted: 31 May 2011

See all articles by Na Dai

Na Dai

SUNY at Albany - School of Business

Date Written: May 27, 2011

Abstract

I study the causes and consequences of staging in the setting of private investments in public equities (PIPEs). I find that, in PIPE investments, as in venture capital staging, the staging strategy is used by investors as a monitoring mechanism to mitigate information asymmetry and agency problems. Moreover, strategic investors and investors investing alone are more likely to utilize staging. I show also that staging reduces the cost of financing and has positive implications for PIPE issuers’ long-run stock performance.

Keywords: Private Investment in Public Equity (PIPE), Staging, Monitoring

JEL Classification: G14, G30, G32, G34

Suggested Citation

Dai, Na, Monitoring via Staging: Evidence from Private Investments in Public Equity (May 27, 2011). Journal of Banking and Finance, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1856062

Na Dai (Contact Author)

SUNY at Albany - School of Business ( email )

1400 Washington Ave.
Albany, NY 12222
United States

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