The Impact of SPAC Mergers on Financial Performance and Growth: Evidence from the Italian Market
Keywords:
Spac Mergers, Financial Performance, Italian Market, Differencein-Difference analysis, Propensity Score Matching, Quantile Regression
Abstract
This study examines the impact of SPAC mergers on the financial performance of Italian firms, focusing on profitability (ROE, ROI), sales growth, and workforce expansion. A sample of business combinations completed between 2015 and 2019 is analyzed using firm-level data from 2013 to 2022. A Propensity Score Matching (PSM) and Difference-in-Differences (DiD) methodology is applied to control for selection bias and assess the causal effects of SPAC mergers. Additionally, non-linear quantile regression is used to capture the heterogeneous effects across firms. The results show a significant decline in profitability post-merger, particularly in ROE and ROI, likely due to integration challenges. While sales growth improves overall, the non-linear analysis reveals that only a subset of firms experiences significant revenue growth. The findings highlight the importance of strategic planning and regulatory oversight in optimizing SPAC mergers, addressing a critical gap in the Italian market where research is limited. This analysis provides valuable insights for managers and policymakers navigating the evolving SPAC landscape in Italy.
Downloads
Download data is not yet available.
Metrics
Metrics Loading ...
PlumX Statistics
References
1. AlShiab, M. S. (2018). Initial Public Offerings Short and Long Term Performance of MENA Countries. European Scientific Journal, ESJ, 14(10), 234.
2. Alvia, D. D. (2020). The international financial regulation of SPACs between legal standardized regulation and standardization of market practices. Journal of Banking Regulation, 21, 107–124.
3. Angrist, J. D., & Pischke, J.-S. (2009). Instrumental Variables in Action: Sometimes You Get What You Need. Mostly Harmless Econometrics Book: An Empiricist’s Companion, 113–219.
4. Austin, P. C. (2011). Optimal number of matches in propensity score matching: Evidence from simulation studies. Biometrical Journal, 53(3), 456-474.
5. Banerjee, S., & Szydlowski, M. (2024). Harnessing the overconfidence of the crowd: A theory of SPACs. Journal of Financial Economics, 153, 103787.
6. Barker, M., & Rueda, M. (2008). SPAC mergers: Risks and opportunities. M&A Journal, 8(10), 12-19.
7. Barth, J. R., Gu, M., & Liu, J. (2023). SPACs: An overview and assessment of returns. American Journal of Economics and Sociology, 82(2), 129–139.
8. Beck, T., Demirgüç-Kunt, A., & Maksimovic, V. (2005). Financial and legal constraints to growth: Does firm size matter? Journal of Finance, 60(1), 137-177.
9. Berger, R. (2008). SPACs: An Alternative Wav to Access the Public Markets. Journal of Applied Corporate Finance, 20(3), 68–75.
10. Blankespoor, E., Hendricks, B. E., Miller, G. S., & Stockbridge, D. R. (2022). A hard look at SPAC projections. Management Science, 68(6), 4742-4753.
11. Blomkvist, M., & Vulanovic, M. (2020). SPAC IPO waves. Economics Letters, 197.
12. Boreiko, D., & Lombardo, S. (2024). The Italian SPACs regulatory regime: An empirical analysis of AIM Italia SPACs. SSRN Electronic Journal.
13. Boyer, C., & Baigent, G. (2008). SPACs as alternative investments: An examination of performance and factors that drive prices. Journal of Private Equity, 11(3), 8-15.
14. Caliendo, M., & Kopeinig, S. (2008). Some practical guidance for the implementation of propensity score matching. Journal of Economic Surveys, 22(1), 31-72.
15. Cao, J., & Lerner, J. (2009). The performance of reverse leveraged buyouts. Journal of Financial Economics, 91(2), 139-157.
16. Chatterjee, S., Chidambaran, N. K., & Goswami, G. (2016). Security design for a non-standard IPO: The case of SPACs. Journal of International Money and Finance, 69, 151–178.
17. Cumming, D. J., Fleming, G., Johan, S., & Takeuchi, M. (2012). SPACs, hedge funds, and performance. European Financial Management, 18(3), 362-392.
18. Cumming, D., Haß, L. H., & Schweizer, D. (2014). The fast track IPO – Success factors for taking firms public with SPACs. Journal of Banking & Finance, 47(1), 198–213.
19. Datar, V., Emm, E., & Ince, U. (2012). Going public through the back door: A comparative analysis of SPACs and IPOs. Banking and Finance Review, 4(1), 17-36.
20. Del Giudice, A., & Signori, A. (2021). Agency conflicts in SPACs: The compensation structure of sponsors. Working Paper.
21. Dimitrova, L. (2017). Perverse incentives of special purpose acquisition companies, the “poor man’s private equity funds.” Journal of Accounting and Economics, 63(1), 99–120.
22. Floros, I. V., & Sapp, T. R. A. (2011). Shell games: On the value of shell companies. Journal of Corporate Finance, 17(4), 850–867.
23. Fumagalli, M. (2014). Lo sviluppo della SPAC (Special Purpose Acquisition Company) in Italia: Un nuovo modo di fare Private Equity e di quotare le imprese in Borsa. EGEA Spa.
24. Gahng, M., Ritter, J. R., & Zhang, D. (2023). SPACs. The Review of Financial Studies, 36(9), 3463–3501.
25. Gigante, G., Conso, A., & Bocchino, E. M. (2020). SPAC from the US to Italy: An evolving phenomenon. EGEA Spa.
26. Gitman, Lawrence J. and Chad J. Zutter. 2015. Principles of Managerial Finance, Fourteenth Edition. United States: Pearson Education.
27. Goyal, V. K., Lehnert, T., & Racic, S. (2021). Corporate leverage and financial flexibility: Evidence from the 2008-2009 financial crisis. Journal of Corporate Finance, 67, 101924.
28. Graham, J. R., & Leary, M. T. (2011). A review of empirical capital structure research and directions for the future. Annual Review of Financial Economics, 3(1), 309-345.
29. Hale, L. M. (2007). SPAC: A financing tool with something for everyone. Journal of Corporate Accounting & Finance, 18(2), 67-74.
30. Hitt, M. A., Harrison, J. S., & Ireland, R. D. (2001). Mergers and acquisitions: A guide to creating value for stakeholders. Oxford University Press.
31. Howe, J. S., & O’Brien, S. W. (2012). SPAC performance, ownership and corporate governance. Advances in Financial Economics, 15, 1–14.
32. Howe, J. S., & O’Brien, S. W. (2012). SPAC performance, ownership and corporate governance. In Advances in Financial Economics (pp. 1-14).
33. Huang, R., Ritter, J. R., & Zhang, D. (2023). IPOs and SPACs: Recent developments. Annual Review of Financial Economics, 15, 595–615.
34. Ignatyeva, E., Rauch, C., & Wahrenburg, M. (2013). Analyzing European SPACs. Journal of Private Equity, 17(1), 64-79.
35. Jenkinson, T., & Ramadorai, T. (2013). Does one size fit all? The consequences of switching markets with different regulatory standards. European Financial Management, 19(5), 852–886.
36. Jenkinson, T., & Sousa, M. (2011). Why SPAC investors should listen to the market. Journal of Applied Finance, 21(2), 38-57.
37. Jog, V., & Sun, C. (2007). Blank check IPOs: A home run for management. Carleton University Working Paper.
38. Kiesel, F., Klingelhöfer, N., Schiereck, D., & Vismara, S. (2023). SPAC merger announcement returns and subsequent performance. European Financial Management, 29(2), 399–420.
39. Kim, H., Ko, J., Jun, C., & Song, K. R. (2021). Going public through mergers with special purpose acquisition companies. International Review of Finance, 21(3), 742–768.
40. Kim, K. L. (2010). The characteristics of SPAC investments in Korea. Capital Market Perspective, 2, 18-27.
41. King, D. R., Dalton, D. R., Daily, C. M., & Covin, J. G. (2004). Meta‐analyses of post‐acquisition performance: Indications of unidentified moderators. Strategic Management Journal, 25(2), 187-200.
42. Klausner, M., & Ohlrogge, M. (2022). Was the SPAC crash predictable? JREG Bulletin, 40, 101.
43. Kolb, J., & Tykvová, T. (2016). Going public via special purpose acquisition companies: Frogs do not turn into princes. Journal of Corporate Finance, 40, 80-96.
44. Kumar, P.S. and Anbanandam, R. (2020), “Theory building on supply chain resilience: a SAP–LAP analysis”, Global Journal of Flexible Systems Management, Vol. 21 No. 2, pp. 113-133.
45. Lakicevic, M., & Vulanovic, M. (2013). A story on SPACs. Managerial Finance, 39(4), 384–403.
46. Lakicevic, M., Shachmurove, Y., & Vulanovic, M. (2014). Institutional changes of specified purpose acquisition companies (SPACs). North American Journal of Economics and Finance, 28, 149-169.
47. Lewellen, S. (2009). SPACs as an asset class. SSRN Working Paper, 1-45.
48. Lin William, C., Beibei, L., & Qingquan Tony, Z. (2021). Internet of things: Business economics and applications.
49. López-Gracia J., Sogorb-Mira F. (2008). Testing trade-off and pecking order theories financing SMEs. Small Business Economics, 38, 117–136.
50. Maksimovic, V., Phillips, G., & Yang, L. (2013). Private and public merger waves. The Journal of Finance, 68(5), 2177–2217.
51. Min, J. K., & Cha, M. S. (2017). A study on earnings management of IPO firms merged with SPAC. Korean Accounting Journal, 26, 161-189.
52. Mule, R. K., & Mukras, M. S. (2015). Financial Leverage and Performance of Listed Firms in a Frontier Market: Panel Evidence from kenia. European Scientific Journal, ESJ, 11(7)
53. Okafor, A. (2019). Refocusing on the Success Enabling Factors in Mergers and Acquisitions. European Scientific Journal, ESJ, 15(16), 172.
54. Okutan Nilsson, G. (2018). Incentive structure of special purpose acquisition companies. European Business Organization Law Review, 19(2), 253-274.
55. PwC. (2021). In depth US2021-01: Domestic SPAC mergers - financial reporting and accounting considerations. CFODirect.
56. Renneboog, L., & Vansteenkiste, C. (2017). Leveraged buyouts: A survey of the literature. SSRN Electronic Journal.
57. Ridgway, B., & Rueda, M. (2008). SPACs and their role in mergers and acquisitions. M&A Journal, 8(10), 12-19Here is the remaining section of your references formatted in APA style:
58. Riemer, D. S. (2007). Special purpose acquisition companies: SPAC and SPAN, or blank check redux. Washington University Law Review, 85(4), 931-969.
59. Ritter, J. R. (2012). The evolving landscape of SPACs and IPOs. Journal of Applied Corporate Finance, 24(4), 17-29.
60. Riva, P., & Provasi, R. (2019). Evidence of the Italian special purpose acquisition company. Corporate Ownership & Control, 16(4), 66-76.
61. Rodrigues, U., & Stegemoller, M. (2014). What all-cash companies tell us about IPOs and acquisitions. Journal of Corporate Finance, 29, 111-121.
62. Sjostrom, W. K. (2007). The truth about reverse mergers. Entrepreneurial Business Law Journal, 2, 743-756.
63. Syverson, C. (2011). What determines productivity? Journal of Economic Literature, 49(2), 326-365.
64. Vulanovic, M. (2017). SPACs: Post-merger survival. Managerial Finance, 43(6), 679–699.
2. Alvia, D. D. (2020). The international financial regulation of SPACs between legal standardized regulation and standardization of market practices. Journal of Banking Regulation, 21, 107–124.
3. Angrist, J. D., & Pischke, J.-S. (2009). Instrumental Variables in Action: Sometimes You Get What You Need. Mostly Harmless Econometrics Book: An Empiricist’s Companion, 113–219.
4. Austin, P. C. (2011). Optimal number of matches in propensity score matching: Evidence from simulation studies. Biometrical Journal, 53(3), 456-474.
5. Banerjee, S., & Szydlowski, M. (2024). Harnessing the overconfidence of the crowd: A theory of SPACs. Journal of Financial Economics, 153, 103787.
6. Barker, M., & Rueda, M. (2008). SPAC mergers: Risks and opportunities. M&A Journal, 8(10), 12-19.
7. Barth, J. R., Gu, M., & Liu, J. (2023). SPACs: An overview and assessment of returns. American Journal of Economics and Sociology, 82(2), 129–139.
8. Beck, T., Demirgüç-Kunt, A., & Maksimovic, V. (2005). Financial and legal constraints to growth: Does firm size matter? Journal of Finance, 60(1), 137-177.
9. Berger, R. (2008). SPACs: An Alternative Wav to Access the Public Markets. Journal of Applied Corporate Finance, 20(3), 68–75.
10. Blankespoor, E., Hendricks, B. E., Miller, G. S., & Stockbridge, D. R. (2022). A hard look at SPAC projections. Management Science, 68(6), 4742-4753.
11. Blomkvist, M., & Vulanovic, M. (2020). SPAC IPO waves. Economics Letters, 197.
12. Boreiko, D., & Lombardo, S. (2024). The Italian SPACs regulatory regime: An empirical analysis of AIM Italia SPACs. SSRN Electronic Journal.
13. Boyer, C., & Baigent, G. (2008). SPACs as alternative investments: An examination of performance and factors that drive prices. Journal of Private Equity, 11(3), 8-15.
14. Caliendo, M., & Kopeinig, S. (2008). Some practical guidance for the implementation of propensity score matching. Journal of Economic Surveys, 22(1), 31-72.
15. Cao, J., & Lerner, J. (2009). The performance of reverse leveraged buyouts. Journal of Financial Economics, 91(2), 139-157.
16. Chatterjee, S., Chidambaran, N. K., & Goswami, G. (2016). Security design for a non-standard IPO: The case of SPACs. Journal of International Money and Finance, 69, 151–178.
17. Cumming, D. J., Fleming, G., Johan, S., & Takeuchi, M. (2012). SPACs, hedge funds, and performance. European Financial Management, 18(3), 362-392.
18. Cumming, D., Haß, L. H., & Schweizer, D. (2014). The fast track IPO – Success factors for taking firms public with SPACs. Journal of Banking & Finance, 47(1), 198–213.
19. Datar, V., Emm, E., & Ince, U. (2012). Going public through the back door: A comparative analysis of SPACs and IPOs. Banking and Finance Review, 4(1), 17-36.
20. Del Giudice, A., & Signori, A. (2021). Agency conflicts in SPACs: The compensation structure of sponsors. Working Paper.
21. Dimitrova, L. (2017). Perverse incentives of special purpose acquisition companies, the “poor man’s private equity funds.” Journal of Accounting and Economics, 63(1), 99–120.
22. Floros, I. V., & Sapp, T. R. A. (2011). Shell games: On the value of shell companies. Journal of Corporate Finance, 17(4), 850–867.
23. Fumagalli, M. (2014). Lo sviluppo della SPAC (Special Purpose Acquisition Company) in Italia: Un nuovo modo di fare Private Equity e di quotare le imprese in Borsa. EGEA Spa.
24. Gahng, M., Ritter, J. R., & Zhang, D. (2023). SPACs. The Review of Financial Studies, 36(9), 3463–3501.
25. Gigante, G., Conso, A., & Bocchino, E. M. (2020). SPAC from the US to Italy: An evolving phenomenon. EGEA Spa.
26. Gitman, Lawrence J. and Chad J. Zutter. 2015. Principles of Managerial Finance, Fourteenth Edition. United States: Pearson Education.
27. Goyal, V. K., Lehnert, T., & Racic, S. (2021). Corporate leverage and financial flexibility: Evidence from the 2008-2009 financial crisis. Journal of Corporate Finance, 67, 101924.
28. Graham, J. R., & Leary, M. T. (2011). A review of empirical capital structure research and directions for the future. Annual Review of Financial Economics, 3(1), 309-345.
29. Hale, L. M. (2007). SPAC: A financing tool with something for everyone. Journal of Corporate Accounting & Finance, 18(2), 67-74.
30. Hitt, M. A., Harrison, J. S., & Ireland, R. D. (2001). Mergers and acquisitions: A guide to creating value for stakeholders. Oxford University Press.
31. Howe, J. S., & O’Brien, S. W. (2012). SPAC performance, ownership and corporate governance. Advances in Financial Economics, 15, 1–14.
32. Howe, J. S., & O’Brien, S. W. (2012). SPAC performance, ownership and corporate governance. In Advances in Financial Economics (pp. 1-14).
33. Huang, R., Ritter, J. R., & Zhang, D. (2023). IPOs and SPACs: Recent developments. Annual Review of Financial Economics, 15, 595–615.
34. Ignatyeva, E., Rauch, C., & Wahrenburg, M. (2013). Analyzing European SPACs. Journal of Private Equity, 17(1), 64-79.
35. Jenkinson, T., & Ramadorai, T. (2013). Does one size fit all? The consequences of switching markets with different regulatory standards. European Financial Management, 19(5), 852–886.
36. Jenkinson, T., & Sousa, M. (2011). Why SPAC investors should listen to the market. Journal of Applied Finance, 21(2), 38-57.
37. Jog, V., & Sun, C. (2007). Blank check IPOs: A home run for management. Carleton University Working Paper.
38. Kiesel, F., Klingelhöfer, N., Schiereck, D., & Vismara, S. (2023). SPAC merger announcement returns and subsequent performance. European Financial Management, 29(2), 399–420.
39. Kim, H., Ko, J., Jun, C., & Song, K. R. (2021). Going public through mergers with special purpose acquisition companies. International Review of Finance, 21(3), 742–768.
40. Kim, K. L. (2010). The characteristics of SPAC investments in Korea. Capital Market Perspective, 2, 18-27.
41. King, D. R., Dalton, D. R., Daily, C. M., & Covin, J. G. (2004). Meta‐analyses of post‐acquisition performance: Indications of unidentified moderators. Strategic Management Journal, 25(2), 187-200.
42. Klausner, M., & Ohlrogge, M. (2022). Was the SPAC crash predictable? JREG Bulletin, 40, 101.
43. Kolb, J., & Tykvová, T. (2016). Going public via special purpose acquisition companies: Frogs do not turn into princes. Journal of Corporate Finance, 40, 80-96.
44. Kumar, P.S. and Anbanandam, R. (2020), “Theory building on supply chain resilience: a SAP–LAP analysis”, Global Journal of Flexible Systems Management, Vol. 21 No. 2, pp. 113-133.
45. Lakicevic, M., & Vulanovic, M. (2013). A story on SPACs. Managerial Finance, 39(4), 384–403.
46. Lakicevic, M., Shachmurove, Y., & Vulanovic, M. (2014). Institutional changes of specified purpose acquisition companies (SPACs). North American Journal of Economics and Finance, 28, 149-169.
47. Lewellen, S. (2009). SPACs as an asset class. SSRN Working Paper, 1-45.
48. Lin William, C., Beibei, L., & Qingquan Tony, Z. (2021). Internet of things: Business economics and applications.
49. López-Gracia J., Sogorb-Mira F. (2008). Testing trade-off and pecking order theories financing SMEs. Small Business Economics, 38, 117–136.
50. Maksimovic, V., Phillips, G., & Yang, L. (2013). Private and public merger waves. The Journal of Finance, 68(5), 2177–2217.
51. Min, J. K., & Cha, M. S. (2017). A study on earnings management of IPO firms merged with SPAC. Korean Accounting Journal, 26, 161-189.
52. Mule, R. K., & Mukras, M. S. (2015). Financial Leverage and Performance of Listed Firms in a Frontier Market: Panel Evidence from kenia. European Scientific Journal, ESJ, 11(7)
53. Okafor, A. (2019). Refocusing on the Success Enabling Factors in Mergers and Acquisitions. European Scientific Journal, ESJ, 15(16), 172.
54. Okutan Nilsson, G. (2018). Incentive structure of special purpose acquisition companies. European Business Organization Law Review, 19(2), 253-274.
55. PwC. (2021). In depth US2021-01: Domestic SPAC mergers - financial reporting and accounting considerations. CFODirect.
56. Renneboog, L., & Vansteenkiste, C. (2017). Leveraged buyouts: A survey of the literature. SSRN Electronic Journal.
57. Ridgway, B., & Rueda, M. (2008). SPACs and their role in mergers and acquisitions. M&A Journal, 8(10), 12-19Here is the remaining section of your references formatted in APA style:
58. Riemer, D. S. (2007). Special purpose acquisition companies: SPAC and SPAN, or blank check redux. Washington University Law Review, 85(4), 931-969.
59. Ritter, J. R. (2012). The evolving landscape of SPACs and IPOs. Journal of Applied Corporate Finance, 24(4), 17-29.
60. Riva, P., & Provasi, R. (2019). Evidence of the Italian special purpose acquisition company. Corporate Ownership & Control, 16(4), 66-76.
61. Rodrigues, U., & Stegemoller, M. (2014). What all-cash companies tell us about IPOs and acquisitions. Journal of Corporate Finance, 29, 111-121.
62. Sjostrom, W. K. (2007). The truth about reverse mergers. Entrepreneurial Business Law Journal, 2, 743-756.
63. Syverson, C. (2011). What determines productivity? Journal of Economic Literature, 49(2), 326-365.
64. Vulanovic, M. (2017). SPACs: Post-merger survival. Managerial Finance, 43(6), 679–699.
Published
2024-11-30
How to Cite
Piatti, D. (2024). The Impact of SPAC Mergers on Financial Performance and Growth: Evidence from the Italian Market. European Scientific Journal, ESJ, 20(31), 1. https://doi.org/10.19044/esj.2024.v20n31p1
Section
ESJ Social Sciences
Copyright (c) 2024 Domenico Piatti
This work is licensed under a Creative Commons Attribution 4.0 International License.
