Performance of ESG SPACs

Managerial Finance, Forthcoming

43 Pages Posted: 2 Aug 2023

See all articles by Vinay T. Datar

Vinay T. Datar

Seattle University

Ekaterina E. Emm

Seattle University

Bo Han

Seattle University

Date Written: July 31, 2023

Abstract

We examine one special focus of Special Purpose Acquisition Companies (SPACs), namely environmental, social and governance (ESG) related investments. By collecting data from several sources on 1,737 SPAC IPOs formed between 2003 and 2022, we classify SPAC’s focus on ESG based on declared focus in SEC (Securities and Exchange Commission) filings and in post-merger annual reports. In our sample, only 50% of SPACs that announce an intention to acquire an ESG focused target ended up fulfilling that goal. In their post-merger operating performance, we find that ESG SPACs perform worse than non-ESG SPACs. Further, while both groups have negative post-merger stock performance, the ESG focused firms perform over 11% lower than non-ESG firms over one event year from the beginning of merged firm’s existence.

Keywords: Special Purpose Acquisition Company, SPAC, Environmental, Social, Governance, ESG, Corporate Social Responsibility, Sustainability, Disclosure, Merger, IPO

JEL Classification: G14, G32, G34, M13, M14, Q56

Suggested Citation

Datar, Vinay T. and Emm, Ekaterina E. and Han, Bo, Performance of ESG SPACs (July 31, 2023). Managerial Finance, Forthcoming, Available at SSRN: https://ssrn.com/abstract=4527490

Vinay T. Datar

Seattle University ( email )

900 Broadway
Seattle, WA 98122
United States
206-296-2801 (Phone)
206-296-2486 (Fax)

Ekaterina E. Emm

Seattle University

900 Broadway
Seattle, WA 98122
United States

Bo Han (Contact Author)

Seattle University ( email )

901 12th Avenue
Seattle, WA 98122
United States

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