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Monitoring via staging: Evidence from Private investments in public equity

Na Dai

Journal of Banking & Finance, 2011, vol. 35, issue 12, 3417-3431

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 (search for similar items in EconPapers)
JEL-codes: G14 G30 G32 G34 (search for similar items in EconPapers)
Date: 2011
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DOI: 10.1016/j.jbankfin.2011.05.022

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Handle: RePEc:eee:jbfina:v:35:y:2011:i:12:p:3417-3431