Dancing in the dark: A study over SPAC performance

Sammanfattning: This paper aims to examine what factors that determine default-free SPAC period returns and explore why the popularity of SPACs has drastically increased in recent years. This is done using a dataset of 345 SPACs listed on the New York Stock Exchange and the NASDAQ. We proceed to calculate the returns using a tailored SPAC period model and compare them with the yield of 2-year US Treasury Notes. We further develop a regression model in order to explain what factors that influence SPAC period returns, such as underwriter ranking and derivative security structure. We find that default-free SPAC period returns on average outperform 2-year US Treasury Yields under the studied period with strong statistically support, however we yield limited insights when examining what components that explain SPAC period returns.