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SUMMARY:The Incentives of SPAC Sponsors
DTSTART:20221216T103000
DTEND:20221216T120000
DTSTAMP:20260921T205613Z
UID:a9c1350d34b5e9f069b1ae26fa16ad7b723af115f6162505c7d4dffa
CATEGORIES:Conferences - Seminars
DESCRIPTION:Wenyu Wang - Kelley School of Business - Indiana University\nT
 he market of Special Purpose Acquisition Companies (SPACs) has exploded in
  recent years\, yet its volatile performance calls into question the impli
 cations of this unique business model and particularly the incentives of t
 he SPAC sponsors on the welfare of SPAC shareholders. This paper quantitat
 ively studies these questions by estimating a model featuring the strategi
 c interactions between SPAC sponsors\, targets\, and investors. The estima
 tion uses a comprehensive hand-collected dataset of SPACs that completed a
 cquisitions between 2009 and April 2022 with rich information such as spon
 sor concessions\, earnouts\, redemptions\, etc. Agency costs appear pervas
 ive: the inter-quintile range of returns to non-redeeming shareholders rea
 ches 19% in deals sorted by their agency conflicts. Average SPAC investors
  make sizeable mistakes in inferring deal quality\, leading them to earn a
  7% lower return. Tying more of the sponsor's promote shares to earnouts s
 ignificantly reduces the agency cost and improves investors' expected retu
 rn\, while cutting back the issuance of warrants has a limited impact on t
 he average SPAC investors' welfare.\n 
LOCATION:UniL Campus\, Room Extra 126
STATUS:CONFIRMED
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