U.S. SPACs with a Focus on China

Abstract

This paper examines the value implications of remedial actions taken by the Securities Exchange Commission (SEC) during 2011 that culminated in delisting a number of Chinese companies from United States public exchanges. To achieve that we examine the institutional characteristics and performance of Specified Purpose Acquisition Companies (SPACs) used as a financing tool and gateway to the U.S. capital markets by Chinese companies in period 2004-2011. Evidence shows that SPACs merging with companies from China are not inferior in corporate structure when compared with other SPACs. While their institutional characteristics are similar, the performance tests indicate that Chinese SPACs lose value around SEC decision dates, but in overall they outperform other SPACs listed in the U.S.

Keywords: Blank Checks, China, Chinese Reverse Mergers, Event Study, Muddy Waters Research, M&A, SEC, SPAC, Specified Purpose Acquisition Companies

JEL Classification: G12, G14, G24, G30, G32, G34