Monitoring via Staging: Evidence from Private Investments in Public Equity
51 Pages Posted: 31 May 2011
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: Suggested Citation
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