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PIPEs, firm investment, and viability

Author

Listed:
  • Mark D. Walker

    (North Carolina State University)

  • Qingqing Wu

    (Xavier University)

Abstract

Using 2342 PIPEs, we investigate the intended use of funds and its relation to firm characteristics and issue outcomes. We find that a slight majority of issues are for investment purposes with the rest being for purposes related to enhancing firm viability. The offer discounts to the private investors and the market’s reaction to the announcement are more related to investment quality for the invest firms and to recovery value for the viability firms. Through an examination of follow-on financing activities, we find broad evidence that PIPEs play an important function and not simply as a stopgap source of finance.

Suggested Citation

  • Mark D. Walker & Qingqing Wu, 2024. "PIPEs, firm investment, and viability," Review of Quantitative Finance and Accounting, Springer, vol. 62(1), pages 171-194, January.
    • Handle: RePEc:kap:rqfnac:v:62:y:2024:i:1:d:10.1007_s11156-023-01200-0
    DOI: 10.1007/s11156-023-01200-0
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    References listed on IDEAS

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    More about this item

    Keywords

    Private investment in public equity (PIPE); Private equity; Firm investment; Firm viability; Follow-on financing;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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