earticle

영어

This study examines the characteristics of Korean SPAC and target companies and how the market reacts to these features based on the events of SPAC’s IPO and merger announcement. First, using 144 SPAC sample from 2010 to 2018, we find that the structure of the sponsor and institution investors are important elements for the positive initial returns of SPAC. Second, using 119 merger announcement sample, we find evidence that the market considers the target firm’s quality based on the incentives of SPAC sponsors and managers. We figure out the inverted U-shape relation between the time-to-announcement and the market reactions and negative relation of deferred fees and SPAC performances. The market does not favorably react to the announcement at the early stage of SPAC and when the deadline of SPAC becomes closer after the certain points, and when the deferred fee of an underwriter is high. This is related to the incentives of managers or underwriters to seek the target regardless of its quality. Besides, the market prefers the mature, more profitable, and Bio related companies as the target of SPAC.