The information conveyed in a spacs offering

Gil Cohen, Mahmoud Qadan

Research output: Contribution to journalArticlepeer-review


The popularity of SPACs (Special Purpose Acquisition Companies) has grown dramatically in recent years as a substitute for the traditional IPO (Initial Public Offer). We modeled the average annual return for SPAC investors and found that this financial tool produced an annual return of 17.3%. We then constructed an information model that examined a SPAC s excess returns during the 60 days after a potential merger or acquisition had been announced. We found that the announcement had a major impact on the SPAC’s share price over the 60 days, delivering on average 0.69% daily excess returns over the IPO portfolio and 31.6% cumulative excess returns for the entire period. Relative to IPOs, the cumulative excess returns of SPACs rose dramatically in the next few days after the potential merger or acquisition announcement until the 26th day. They then declined but rose again until the 48th day after the announcement. Finally, the SPAC’s structure reduced the investors’ risk. Thus, if investors buy a SPAC stock immediately after a potential merger or acquisition has been announced and hold it for 48 days, they can reap substantial short-term returns.

Original languageEnglish
Article number1215
Issue number9
StatePublished - 15 Sep 2021

Bibliographical note

Publisher Copyright:
© 2021 by the authors. Licensee MDPI, Basel, Switzerland.


  • IPO
  • Information
  • Market efficiency
  • Pipes

ASJC Scopus subject areas

  • Information Systems
  • Mathematical Physics
  • Physics and Astronomy (miscellaneous)
  • General Physics and Astronomy
  • Electrical and Electronic Engineering


Dive into the research topics of 'The information conveyed in a spacs offering'. Together they form a unique fingerprint.

Cite this