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Going public through mergers with special purpose acquisition companies
Author(s) -
Kim Hyunseok,
Ko Jayoung,
Jun Chulhee,
Song Kyojik “Roy”
Publication year - 2021
Publication title -
international review of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.489
H-Index - 18
eISSN - 1468-2443
pISSN - 1369-412X
DOI - 10.1111/irfi.12297
Subject(s) - merge (version control) , initial public offering , shareholder , business , listing (finance) , mergers and acquisitions , stock (firearms) , accounting , finance , monetary economics , industrial organization , corporate governance , economics , mechanical engineering , computer science , engineering , information retrieval
In this study, we find that private operating firms with larger controlling shareholders' ownership merge with special purpose acquisition companies (SPACs) rather than take the conventional initial public offering (IPO) route to go public in Korea. This finding indicates that compared to U.S. SPACs, the controlling shareholders' motive to avoid their ownership dilution makes SPAC mergers popular in Korea. In addition, we document that the merged firms do not reveal difference in stock and operating performance over the long run compared to conventional IPO firms. However, SPAC mergers incur higher direct cost and do not generate marketing benefits for the listing firms.