University of Twente Student Theses


The influence of experienced intermediaries on the performance of SPACs

Gosen, N.K. (2021) The influence of experienced intermediaries on the performance of SPACs.

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Abstract:In this study, the effect of experienced intermediaries on SPAC performance is examined. Intermediaries play an important role in various SPAC processes such as the IPO, deal brokering with potential targets, preparation and filing of financial statements and the registration of securities after a successful business acquisition. Three intermediary types are examined: underwriters, legal firms, and auditors. Experienced intermediaries are defined as intermediaries that have worked on numerous prior SPAC deals and possess significant market share of the total SPAC market for intermediaries. SPAC performance is examined on acquisition approval probability and investor returns during the SPAC lifecycle. The sample used in this study consisted of US listed SPACs that either successfully acquired a company or have been liquidated over the period 2015-2021. The results show that the experience of intermediaries has mixed effects on the acquisition approval probability and investor returns. Underwriters and auditors with a higher deal count, but a lower market share, improve acquisition approval probability. Legal firms with a lower deal count, but a higher market share, improve acquisition approval probability. Results regarding investor returns show that underwriters negatively affect investor returns surrounding the announcement date and over the lifecycle of the SPAC. Legal firms with a low number of prior deals, but a high market share, positively affect the investor returns. Auditing firms with a higher number of prior deals have a low positive effect on the returns surrounding the announcement date. The results are highly statistically significant and robust. This study contributes to the existing literature because variables regarding legal firms and auditors have not been analyzed in prior research. In addition, the performance of SPACs in the period 2015-2011 has not been researched previously.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:83 economics, 85 business administration, organizational science
Programme:Business Administration MSc (60644)
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