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Three Essays on Private Investments in Public Equity.

Record Type:	Language materials, manuscript : Monograph/item
Title/Author:	Three Essays on Private Investments in Public Equity./
Author:	Liu, Yini.
Description:	1 online resource (205 pages)
Notes:	Source: Dissertations Abstracts International, Volume: 82-03, Section: A.
Contained By:	Dissertations Abstracts International82-03A.
Subject:	Finance. -
Online resource:	click for full text (PQDT)
ISBN:	9798672135397

Three Essays on Private Investments in Public Equity.
Liu, Yini.

Three Essays on Private Investments in Public Equity. - 1 online resource (205 pages)

Source: Dissertations Abstracts International, Volume: 82-03, Section: A.

Thesis (Ph.D.)--The University of Texas at San Antonio, 2020.

Includes bibliographical references

This dissertation investigates the U.S. listed public firms' financing activities through private equity offerings. The first essay examines the role of placement agents in private investments in public equity (PIPE) deals of firms that went public via a reverse merger (RM). Reputable placement agents with greater expertise help RM firms to complete their PIPE deals in a smaller number of financing rounds and raise funds from a larger base of private investors. In exchange for these benefits, RM firms advised by expert agents agree to more investor-friendly contract terms and pay higher cash compensation to their placement agents. Overall, the evidence indicates that, while expert PIPE agents use their superior networking capabilities to reduce the search costs of RM firms, they also exercise more bargaining power against RM firms compared to non-expert PIPE agents.The second essay studies the effect of litigation risk on the characteristics of PIPE deals. PIPE firms face costly securities class action lawsuits as these firms are not exempt from antifraud, civil liability, or other provisions of federal securities laws. First, using data on securities class action lawsuits initiated before the PIPE transactions, this essay finds that litigation risk affects firms' security choice in PIPEs subsequent to prior litigation. Consistent with a greater potential disagreement between firm insiders and outside investors, previously litigated public firms are less likely to issue common stock and more likely to issue convertible securities (debt or preferred stock) in PIPEs. Second, previously litigated firms offer more investor control rights and investor protection terms in their PIPE contracts. Third, consistent with the hypothesis that previously litigated public firms are more averse to diluting the ownership stakes of their current shareholders, PIPE offer price discounts are negatively associated with firms' pre-PIPE litigation risk. Furthermore, firms offering larger price discounts in their PIPEs, are more likely to incur future litigation and experience lower long-term abnormal stock returns post-issue.The third essay examines the impact of litigation risk on short selling activity around PIPE transactions. PIPE issuers that incurred securities class action lawsuits prior to the PIPE offering are shorted more heavily around the PIPE issuance date. Heterogeneity in the level of issuers' litigation risk such as the case status at the time of security issue and the timing of the private placement after the litigation event affects the extent of short selling activity surrounding PIPEs. In addition, the effects of litigation risk on short selling are more pronounced in PIPEs where lead investors are hedge funds. This study implies that outside investors incorporate value-relevant information about issuing firms' litigation risk through their short selling activity around PIPE offerings.

Electronic reproduction.
Ann Arbor, Mich. :
ProQuest,
2024

Mode of access: World Wide Web

ISBN: 9798672135397Subjects--Topical Terms:

559073
Finance.
Subjects--Index Terms:

Law and financeIndex Terms--Genre/Form:

554714
Electronic books.

Three Essays on Private Investments in Public Equity.
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500 $a Source: Dissertations Abstracts International, Volume: 82-03, Section: A.
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504 $a Includes bibliographical references
520 $a This dissertation investigates the U.S. listed public firms' financing activities through private equity offerings. The first essay examines the role of placement agents in private investments in public equity (PIPE) deals of firms that went public via a reverse merger (RM). Reputable placement agents with greater expertise help RM firms to complete their PIPE deals in a smaller number of financing rounds and raise funds from a larger base of private investors. In exchange for these benefits, RM firms advised by expert agents agree to more investor-friendly contract terms and pay higher cash compensation to their placement agents. Overall, the evidence indicates that, while expert PIPE agents use their superior networking capabilities to reduce the search costs of RM firms, they also exercise more bargaining power against RM firms compared to non-expert PIPE agents.The second essay studies the effect of litigation risk on the characteristics of PIPE deals. PIPE firms face costly securities class action lawsuits as these firms are not exempt from antifraud, civil liability, or other provisions of federal securities laws. First, using data on securities class action lawsuits initiated before the PIPE transactions, this essay finds that litigation risk affects firms' security choice in PIPEs subsequent to prior litigation. Consistent with a greater potential disagreement between firm insiders and outside investors, previously litigated public firms are less likely to issue common stock and more likely to issue convertible securities (debt or preferred stock) in PIPEs. Second, previously litigated firms offer more investor control rights and investor protection terms in their PIPE contracts. Third, consistent with the hypothesis that previously litigated public firms are more averse to diluting the ownership stakes of their current shareholders, PIPE offer price discounts are negatively associated with firms' pre-PIPE litigation risk. Furthermore, firms offering larger price discounts in their PIPEs, are more likely to incur future litigation and experience lower long-term abnormal stock returns post-issue.The third essay examines the impact of litigation risk on short selling activity around PIPE transactions. PIPE issuers that incurred securities class action lawsuits prior to the PIPE offering are shorted more heavily around the PIPE issuance date. Heterogeneity in the level of issuers' litigation risk such as the case status at the time of security issue and the timing of the private placement after the litigation event affects the extent of short selling activity surrounding PIPEs. In addition, the effects of litigation risk on short selling are more pronounced in PIPEs where lead investors are hedge funds. This study implies that outside investors incorporate value-relevant information about issuing firms' litigation risk through their short selling activity around PIPE offerings.
533 $a Electronic reproduction. $b Ann Arbor, Mich. : $c ProQuest, $d 2024
538 $a Mode of access: World Wide Web
650 4 $a Finance. $3 559073
653 $a Law and finance
653 $a Private investments in public equity
653 $a Reverse merger
653 $a Short selling
655 7 $a Electronic books. $2 local $3 554714
690 $a 0508
710 2 $a ProQuest Information and Learning Co. $3 1178819
710 2 $a The University of Texas at San Antonio. $b Finance. $3 1192630
773 0 $t Dissertations Abstracts International $g 82-03A.
856 4 0 $u http://pqdd.sinica.edu.tw/twdaoapp/servlet/advanced?query=28022397 $z click for full text (PQDT)