Playing Poker without Looking at the Cards—Does it Even Matter?

Abstract

In 2020, the recent boom of Special Purpose Acquisition Companies (SPACs) resulted in this financial vehicle overtaking traditional IPOs as the leading firm structure for taking companies public. The dormant structure of SPACs forces investors to primarily rely on the management team to find value-creating acqui-sitions. Thence, this thesis aims to find SPAC characteristics capable of being deemed as determinants for stock performance. Utilized variables are gender di-versity in management, operational experience and specified scope of geography or industry. The investigated sample consists of 59 SPACs that consummated a business combination between 2014 and 2020. This study applies an event study methodology to obtain abnormal returns related to business combination specific events, which is followed by a multiple linear regression in order to de-rive stock performance determinants. We report non-significant results across all variables and event windows, although gender diversity indicates a positive short term relationship to performance, which is in accordance with preceding stud-ies. Operational experience shows contradictory negative outcomes. In contrast, the coeÿcients for Scope show supporting positive trends with prior research. While the insignificant results of this study may be insignificant, they do serve a worthy cause as this study supplements prior research with meaningful insights.