Monitoring via staging: Evidence from Private investments in public equity |
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Authors: | Na Dai |
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Affiliation: | School of Business, SUNY at Albany, Albany, NY 12222, USA |
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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. |
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Keywords: | JEL classification: G14 G30 G32 G34 |
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