Blank Check IPOs: A Home Run for Management

31 Pages Posted: 3 Oct 2007

See all articles by Vijay M. Jog

Vijay M. Jog

Carleton University - Eric Sprott School of Business

Chengye Sun

Carleton University

Date Written: August 2007


In the last four years, sixty-two blank check companies have raised $4 billion dollars with their IPOs. According to the SEC definition, a Blank Check company is a development stage company that has no specific business plan or purpose, or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, other entity, or person. These companies typically involve speculative investments and often fall within the SEC's definition of "penny stocks" or are considered microcap stocks" even though some of these companies raise more money than a typical standard IPO. In this paper, we document various aspects of these companies and IPOs and analyse the returns earned by shareholders and management, from their issuance date to the post-acquisition date. Our results show that the shareholders of blank check IPOs earned minus 3% annualised abnormal returns, whereas management earned approximately 1900 percent annualised return. It looks like the investors essentially wrote a blank check to management.

Keywords: Blank check, IPO, private equity

JEL Classification: E44, D30

Suggested Citation

Jog, Vijay M. and Sun, Chengye, Blank Check IPOs: A Home Run for Management (August 2007). Available at SSRN: or

Vijay M. Jog (Contact Author)

Carleton University - Eric Sprott School of Business ( email )

1125 Colonel By Drive
Ottawa, Ontario K1S SB6
613-520-2600 (Phone)
613-520-4427 (Fax)

Chengye Sun

Carleton University ( email )

1125 colonel By Drive
Ottawa, Ontario K1S 5B6