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Financial Contracts in PIPE Offerings: The Role of Expert Placement Agents

Bengtsson, Ola LU and Dai, Na (2014) In Financial Management 43(4). p.795-832
Abstract
We examine how Private Investment in Public Equity (PIPE) contracts allocate contingent cash flow rights between investors and issuers and the role of placement agents in PIPE contract design. Issuers advised by expert agents agree to more investor-friendly terms than issuers advised by nonexpert agents. Expert agents appear to help issuers understand the payoff consequences of negotiable terms. Moreover, expert agents allow issuers to negotiate more attractive pricing when they agree to investor-friendly terms. Issuers earn higher postoffering stock returns when they use expert agents or agree to more investor-friendly terms. These results suggest that the involvement of expert agents is beneficial to PIPE issuers.
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author
organization
publishing date
type
Contribution to journal
publication status
published
subject
in
Financial Management
volume
43
issue
4
pages
795 - 832
publisher
Wiley-Blackwell
external identifiers
  • wos:000345307600003
  • scopus:84922761754
ISSN
0046-3892
DOI
10.1111/fima.12061
language
English
LU publication?
yes
id
ef0cc4ac-5410-4ca1-b65e-3a9cbd14d37b (old id 4982900)
date added to LUP
2015-01-27 10:45:46
date last changed
2017-11-05 04:03:04
@article{ef0cc4ac-5410-4ca1-b65e-3a9cbd14d37b,
  abstract     = {We examine how Private Investment in Public Equity (PIPE) contracts allocate contingent cash flow rights between investors and issuers and the role of placement agents in PIPE contract design. Issuers advised by expert agents agree to more investor-friendly terms than issuers advised by nonexpert agents. Expert agents appear to help issuers understand the payoff consequences of negotiable terms. Moreover, expert agents allow issuers to negotiate more attractive pricing when they agree to investor-friendly terms. Issuers earn higher postoffering stock returns when they use expert agents or agree to more investor-friendly terms. These results suggest that the involvement of expert agents is beneficial to PIPE issuers.},
  author       = {Bengtsson, Ola and Dai, Na},
  issn         = {0046-3892},
  language     = {eng},
  number       = {4},
  pages        = {795--832},
  publisher    = {Wiley-Blackwell},
  series       = {Financial Management},
  title        = {Financial Contracts in PIPE Offerings: The Role of Expert Placement Agents},
  url          = {http://dx.doi.org/10.1111/fima.12061},
  volume       = {43},
  year         = {2014},
}