Is There an Industry Effect of SPAC Merger Announcements?

Description

This study investigates whether SPAC merger announcements generate competitive effects within their industries. Using a sample of 468 SPAC mergers from 2016 to 2023, the results indicate that rival firms experience significant negative abnormal returns, especially around smaller and riskier deals generating lower announcement returns for SPACs. Additional evidence links more severe rival reactions to higher redemption rates and longer completion timelines. Collectively, the findings suggest that SPAC mergers significantly impact industry competitive dynamics, but that positive market sentiment toward stronger deals can moderate these effects.

Institutions

• Ryerson University School of Accounting and Finance

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