| Summary: | 碩士 === 輔仁大學 === 金融與國際企業學系金融碩士班 === 104 === In this study we explore the relationship between the use of fund from PIPE and corporate governance. Using 1,499 PIPEs from 1,114 listed firms in China in the sampling period of 2006-2014 we find that the fund from PIPEs accentuates investment-cash flow sensitivity, implying that the fund from PIPEs punctuates implied agency problems from free cash flow. We further contrast high- versus low-PIPEs using the sampling median and find that high-PIPE accentuates while low-PIPE attenuates investment-cash flow sensitivity, indicating high-PIPE engenders agency problems while low-PIPE ameliorates the adverse impact of information asymmetry. Moreover, we find that good corporate governance as manifested in low wedge associated with the controlling owner and high board independence could ameliorate the adverse impact from high-PIPE. Finally, we find that the investors from the PIPE market could detect the potential agency problem embedded in the claimed use of fund. Specifically, the odds of completing a PIPE from the rumor of PIPE is negatively correlated with the claimed use of PIPE fund in M&A.
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