A Story on SPACs

Managerial Finance, Vol.39, Issue 4, March 2013

37 Pages Posted: 11 Nov 2011 Last revised: 3 May 2017

Date Written: November 11, 2011

Abstract

We study characteristics of Specified Purpose Acquisition Companies (SPACs) and examine the performance of their securities over time. We find that SPACs represent a fairly unique way to raise capital. The incentives of their founders, underwriters, and investors are interdependent and successful business combinations generally result in significant returns to founders. We also show that different SPAC securities generate different reactions in response to the announcement news regarding their corporate status. While holders of all three securities realize abnormal returns on the announcement day, the strongest reaction is observed among the investors holding warrants, while common stock holders tend to react very mildly.

Keywords: Specified Purpose Acquisition Company, SPACs, Blank Checks, IPO, Unit Offering, Reverse Merger

JEL Classification: G32, G34

Suggested Citation

Lakicevic, Milan and Vulanovic, Milos, A Story on SPACs (November 11, 2011). Managerial Finance, Vol.39, Issue 4, March 2013, Available at SSRN: https://ssrn.com/abstract=1958238 or http://dx.doi.org/10.2139/ssrn.1958238

Milan Lakicevic

College of Economics ( email )

Cetinjska br.2
Podgorica, 81 000
Montenegro

Milos Vulanovic (Contact Author)

EDHEC Business School ( email )

24, avenue Gustave Delory
CS 50411
Roubaix, 59057
France

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