The choice between PIPE and SEO in China

Seungjoon Oh, Heungju Park and Chi Zhang

China Economic Review, 2019, vol. 57, issue C

Abstract: China's private investment in public equity (PIPE) market has exceeded the aggregate proceeds raised by its seasoned equity offering (SEO) market. Taking into account the institutional and regulatory backgrounds of China's secondary equity markets, this paper examines how listed firms choose between PIPE and SEO. Firms with both options tend to be induced by the greater flexibility in its equity offering mechanism to choose PIPE over SEO, particularly when stock price volatility is high or the market is performing poorly. SEO issuers are more likely to time the stock market. Post issuance abnormal returns, in both short- and long-run tend to be higher for PIPE than for SEO issuers.

Keywords: Private investment in public equity; Seasoned equity offering; China (search for similar items in EconPapers)
JEL-codes: G14 G23 G32 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:57:y:2019:i:c:s1043951x18300579

DOI: 10.1016/j.chieco.2018.05.003

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