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The choice between PIPE and SEO in China

Author

Listed:
  • Oh, Seungjoon
  • Park, Heungju
  • Zhang, Chi

Abstract

China's private investment in public equity (PIPE) market has exceeded the aggregate proceeds raised by its seasoned equity offering (SEO) market. Taking into account the institutional and regulatory backgrounds of China's secondary equity markets, this paper examines how listed firms choose between PIPE and SEO. Firms with both options tend to be induced by the greater flexibility in its equity offering mechanism to choose PIPE over SEO, particularly when stock price volatility is high or the market is performing poorly. SEO issuers are more likely to time the stock market. Post issuance abnormal returns, in both short- and long-run tend to be higher for PIPE than for SEO issuers.

Suggested Citation

  • Oh, Seungjoon & Park, Heungju & Zhang, Chi, 2019. "The choice between PIPE and SEO in China," China Economic Review, Elsevier, vol. 57(C).
    • Handle: RePEc:eee:chieco:v:57:y:2019:i:c:s1043951x18300579
    DOI: 10.1016/j.chieco.2018.05.003
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    Cited by:

    1. Mark D. Walker & Qingqing Wu, 2024. "PIPEs, firm investment, and viability," Review of Quantitative Finance and Accounting, Springer, vol. 62(1), pages 171-194, January.

    More about this item

    Keywords

    Private investment in public equity; Seasoned equity offering; China;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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