Contributing factors to the performance of firms acquired by special purpose acquisition companies

Abstract

SPACs were one of the most discussed topics in media recently. This paper examines which factors contribute to the performance of firms that merged with SPACs. Multi-linear regression analyses are performed with a sample of 77 different firms acquired between 2006 and 2020. Initiators (sponsors) of SPACs are often considered well experienced in their industries. This study confirms that if a sponsor to okover the CEO role in the operating company, it positively impacts returns, especially in complex industries. Eventually, it can be concluded that sponsors’ involvement in the merged entity's management team positively impacts returns regardless of the industry.