SPACs: Post-Merger Survival

Managerial Finance, 2016, DOI: org/10.1108/MF-09-2016-0263

38 Pages Posted: 24 Jun 2016 Last revised: 3 May 2017

Date Written: June 25, 2016

Abstract

This paper studies how institutional characteristics of Specified Purpose Acquisition Companies (SPACs) are related to their post-merger survival. SPACs are unique financial firms that conduct the IPO with the solely purpose to use the proceeds to acquire another private company. Paper finds that institutional characteristics of SPACs are important in determining post-merger outcomes of new company, specifically when it comes to their survival/failure. Namely, increases in pre-merger commitment by SPAC stakeholders and initial positive market performance increase post-merger survival likelihood. On the contrary, mergers with higher transaction costs and focused on foreign companies exhibit increased failure likelihood.

Keywords: Blank checks, Initial public offering, IPO survival, M&A, SPACs, Specified purpose acquisition companies

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

Suggested Citation

Vulanovic, Milos, SPACs: Post-Merger Survival (June 25, 2016). Managerial Finance, 2016, DOI: org/10.1108/MF-09-2016-0263, Available at SSRN: https://ssrn.com/abstract=2798048 or http://dx.doi.org/10.2139/ssrn.2798048

Milos Vulanovic (Contact Author)

EDHEC Business School ( email )

24, avenue Gustave Delory
CS 50411
Roubaix, 59057
France

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