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- Title
SPACs.
- Authors
Gahng, Minmo; Ritter, Jay R; Zhang, Donghang
- Abstract
Going public by merging with a Special Purpose Acquisition Company (SPAC) is much more expensive than conducting a traditional IPO. We rationalize why some companies merge with a SPAC by listing the potential benefits. We analyze the agency problems that certain SPAC features address. SPAC IPO investors and deal sponsors have earned remarkably high annualized average returns, although we warn that recent deals are likely to disappoint. Public investors in the merged companies have earned very low market-adjusted returns on an equally weighted basis, although high redemptions on the worst deals have limited the amount of money that they lost. Authors have furnished an Internet Appendix , which is available on the Oxford University Press Web site next to the link to the final published paper online.
- Subjects
SPECIAL purpose acquisition companies; SPECIAL purpose entities (Corporations); GOING public (Securities); BUSINESS enterprises; MERGERS &; acquisitions; CORPORATE finance; INVESTORS; RATE of return
- Publication
Review of Financial Studies, 2023, Vol 36, Issue 9, p3463
- ISSN
0893-9454
- Publication type
Article
- DOI
10.1093/rfs/hhad019