Foreign issuers in the U.S. PIPE market

K. Stephen Haggard and Ying Jenny Zhang

Journal of Multinational Financial Management, 2010, vol. 20, issue 2-3, 144-157

Abstract: We document that the use of private investment in public equity (PIPE) by foreign firms listed on U.S. exchanges is growing even faster than its use by U.S. firms. On average, foreign firm PIPE stock deals represent a similar proportion of the firm's market capitalization to U.S. firm PIPEs, but suffer less of a share price discount than U.S. firm PIPE issuances, a relation that is robust to consideration of exchange, deal size, share turnover and return volatility. We document that hedge funds are only small investors in foreign firm PIPEs issued in the U.S., which tend to be purchased by pensions, government funds and corporations. PIPE, in combination with the reverse merger method of going public, provides a cost-effective means for foreign firms to raise capital in the U.S. capital market.

Keywords: PIPE; International; finance; Securities; issuance; Corporate; finance (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:eee:mulfin:v:20:y:2010:i:2-3:p:144-157

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