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What has been changed in SPAC mergers? Evidence from Korea since their introduction

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  • Kang, Hyung Cheol
  • Lee, Sangwon

Abstract

We examine the development of special purpose acquisition companies (SPACs) in Korea from their introduction with a regulation change in 2010. We find that later “generation” SPACs have featured a lower merger success rate, paid a higher merger premium, and taken longer to consummate a merger. Also, more experienced SPAC sponsors have been less likely to secure a merger deal and more likely to pay a higher premium if they have secured a deal. Our results are consistent with the argument that there is increased competition among SPACs for the limited pool of suitable targets.

Suggested Citation

  • Kang, Hyung Cheol & Lee, Sangwon, 2023. "What has been changed in SPAC mergers? Evidence from Korea since their introduction," Finance Research Letters, Elsevier, vol. 56(C).
    • Handle: RePEc:eee:finlet:v:56:y:2023:i:c:s1544612323005123
    DOI: 10.1016/j.frl.2023.104140
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    References listed on IDEAS

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    1. Akdoğu, Evrim & Simsir, Serif Aziz & Meriç Yılmaz, Merve, 2022. "SPACs and the regulation gap: The effect of first SEC intervention on share and warrant returns," Finance Research Letters, Elsevier, vol. 50(C).
    2. Huang, Qianqian & Jiang, Feng & Lie, Erik & Yang, Ke, 2014. "The role of investment banker directors in M&A," Journal of Financial Economics, Elsevier, vol. 112(2), pages 269-286.
    3. Lee, Sangwon & Yerramilli, Vijay, 2022. "Reference prices, relative values, and the timing of M&A announcements," Journal of Corporate Finance, Elsevier, vol. 76(C).
    4. Kathleen Fuller & Jeffry Netter & Mike Stegemoller, 2002. "What Do Returns to Acquiring Firms Tell Us? Evidence from Firms That Make Many Acquisitions," Journal of Finance, American Finance Association, vol. 57(4), pages 1763-1793, August.
    5. Hyunseok Kim & Jayoung Ko & Chulhee Jun & Kyojik “Roy” Song, 2021. "Going public through mergers with special purpose acquisition companies," International Review of Finance, International Review of Finance Ltd., vol. 21(3), pages 742-768, September.
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    Cited by:

    1. Kang, Hyung Cheol & Lee, Sangwon, 2024. "SPACs and the COVID-19 pandemic: Evidence from Korea," Research in International Business and Finance, Elsevier, vol. 72(PB).

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    More about this item

    Keywords

    Korean SPAC; Special purpose acquisition company; SPAC competition; Merger and acquisition;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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