Information and self-selection in the PIPE market
Name
232679033-MIT.pdf
Description
Full printable version
Size
3.09 MB
Format
Adobe PDF
Checksum (MD5)
97b651b929c96d3d8ff287719e36745f
Author(s)
Koshal, Amit
Advisor(s)
S.P. Kothari.
Date Issued
2007
Publisher
Massachusetts Institute of Technology
Abstract
PIPEs (Private Investments in Public Equity) are unique in that they are negotiated privately between sophisticated investors and the public firm. As a result, the issue price deviates from the firm's stock price, often resulting in a substantial PIPE discount. However, only a limited set of firms issues equity at such a discount. PIPE issuers tend to be low quality, less transparent firms that cannot raise capital through traditional sources. As indicators of this quality, I examine the firm's accruals and audit quality in the year of its PIPE issuance. I find that the PIPE discount is more strongly associated with audit quality, and that firms with low quality auditors are issued at a 5% discount relative to comparable firms with high quality auditors. Much of this discount is due to self-selection, suggesting that higher quality PIPE issuers select high quality auditors.
Description
Thesis (Ph. D.)--Massachusetts Institute of Technology, Sloan School of Management, 2007.
Includes bibliographical references (leaves 44-49).
Subjects
Sloan School of Management.
MIT Department
Sloan School of Management
Terms of Use
M.I.T. theses are protected by
copyright. They may be viewed from this source for any purpose, but
reproduction or distribution in any format is prohibited without written
permission. See provided URL for inquiries about permission.
copyright. They may be viewed from this source for any purpose, but
reproduction or distribution in any format is prohibited without written
permission. See provided URL for inquiries about permission.
Persistent DSpace Link
