대학갤러리

Kyojik “Roy” Song(Professor of Finance)

SungKyunkwan University

 

Abstract:

In this study, we investigate the determinant of Korean firms’ choice to merge with SPACs and their performance. We find that private operating firms with larger controlling shareholders’ ownership merge with SPACs rather than take the conventional IPO route to go public. This finding indicates that the controlling shareholders’ motive to avoid their ownership dilution makes SPAC mergers popular in Korea. We also find that small firms with venture capital investing tend to choose merging with SPACs. In addition, we document that SPAC merger firms incur the less direct and indirect costs of going public, and the merged firms do not reveal difference in stock and operating performance over the long run compared to conventional IPO firms. Results suggest the small firms taking a route of merging with SPACs are not inferior, and can save time and cost compared to the traditional IPO process.

JEL Classification: G30

Keywords: Going public, Special purpose acquisition company (SPAC), Merger, Controlling shareholders