Cross-border acquisitions: The case of SPACs

Ekaterina E. Emm, Bo Han and Bochen Li

Pacific-Basin Finance Journal, 2024, vol. 85, issue C

Abstract: We examine one aspect of special purpose acquisition companies (SPACs) in the U.S. market, namely their focus on foreign targets. Using a sample of 1737 SPAC IPO filings and 537 SPAC mergers with targets from 28 countries between 2003 and 2022, we study both the geographic preference revealed in SPACs' IPO filings and the geographic location of target firms in the subsequent acquisitions. Our results show that 69% of SPACs with a declared foreign focus are subsequently successful in acquiring a foreign target. However, they take longer time to identify and complete mergers compared to those with a domestic focus. When a merger is announced, SPACs with U.S. targets exhibit significantly higher announcement returns compared to those with foreign targets, with an even more pronounced difference when targets are from China or other emerging markets. Post merger, all SPACs exhibit poor market-adjusted returns. SPACs with Chinese targets suffer the worst one-year post-merger stock performance, whereas those with targets from other emerging markets perform considerably better than the rest of their peers. Further examination suggests that country-level factors, such as investor protection and accounting standards, are significant determinants in post-merger market performance of SPACs engaged in cross-border acquisitions.

Keywords: Special purpose acquisition company; SPAC; Cross-border mergers and acquisitions; Merger; IPO; Emerging markets; China (search for similar items in EconPapers)
JEL-codes: F21 F23 G15 G32 G34 M13 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0927538X24001471
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:pacfin:v:85:y:2024:i:c:s0927538x24001471

DOI: 10.1016/j.pacfin.2024.102396

Access Statistics for this article

Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee

More articles in Pacific-Basin Finance Journal from Elsevier
Bibliographic data for series maintained by Catherine Liu ().