Blank Check Acquisitions

54 Pages Posted: 29 May 2012 Last revised: 7 Jun 2012

See all articles by Anh L. Tran

Anh L. Tran

Cass Business School, City University London

Date Written: November 16, 2010


Special Purpose Acquisition Companies (SPACs), a particular type of blank check firms, have risen dramatically since 2003 and account for one third of the U.S. IPO market in 2008. Compared to other public acquirers, SPACs tend to make focused acquisitions, target mostly private companies, are less likely to do cash only deals or tender offers, and less likely to complete acquisitions. SPACs exhibit a mean cumulative abnormal return of 1.7% upon deal announcement and a monthly excess return of 1.5% from deal announcement until closing. I show that SPACs make better acquisitions: they negotiate an additional 7.6% discount compared to other public acquirers that bid for private targets. The results highlight the role of specialization, ownership structure, and independent long-term institutional blockholders’ monitoring as important corporate governance mechanisms in SPACs.

Keywords: Blank check, Acquisitions, Bidder returns

JEL Classification: G34

Suggested Citation

Tran, Anh L., Blank Check Acquisitions (November 16, 2010). Available at SSRN: or

Anh L. Tran (Contact Author)

Cass Business School, City University London ( email )

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