The certification role of insider participation in PIPEs

A Global Analysis of Private Investments in Public Equity

“…However, we do not have this information. Alternatively, we use the ownership concentration of PIPE issuers, since insider participation in PIPEs is perceived positively by the market, exerting a certification effect(Floros et al, 2020). The results (untabulated) remain the same.…”

A global analysis of Private Investments in Public Equity

“…In addition, PIPE issuing firms have the option to negotiate directly with the purchaser, which reduces the direct offering costs (Chen, Dai and Schatzberg, 2010;Dresner and Kim, 2010). (Hertzel and Smith, 1993), the initial positive market reaction is attributed to the certification effect of informed investors participating in PIPEs (Floros, Nagarajan and Sivaramakrishnan, 2017;Hertzel and Smith, 1993) and the subsequent rise in the likelihood of an increase in firm value due to the enhanced monitoring (Barclay, Holderness and Sheehan, 2007;Dai, 2007;Wruck, 1989).…”