Sponsor reputation and agency conflicts in SPACs

Alfonso Del Giudice and Andrea Signori

International Review of Financial Analysis, 2024, vol. 92, issue C

Abstract: We investigate the agency conflict between sponsors and investors in Special Purpose Acquisition Companies (SPACs) and the role of sponsor reputation in such conflict. We find that the effect of reputation depends on whether sponsors are repeat or occasional players in financial markets. SPACs sponsored by private equity firms, who face reputational concerns due to frequent interactions with investors, conduct a more virtuous target selection process as they are less likely to merge but post-merger returns are significantly better. On the other hand, former executives of renowned companies who occasionally launch SPACs make deals more lucrative to themselves, with no benefits to investors.

Keywords: Special purpose acquisition company; SPAC; Sponsors; Reputation; IPO; Agency conflicts (search for similar items in EconPapers)
JEL-codes: G30 G34 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1057521923005707
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:92:y:2024:i:c:s1057521923005707

DOI: 10.1016/j.irfa.2023.103054

Access Statistics for this article

International Review of Financial Analysis is currently edited by B.M. Lucey

More articles in International Review of Financial Analysis from Elsevier
Bibliographic data for series maintained by Catherine Liu ().