SPAC IPOs and Sponsor Network Centrality
研究了SPAC发起人的私募股权和风险投资网络中心性如何影响并购成功率及事后收益，发现高中心性带来更高成功率和异常回报，尤其在市场冷淡时更显著。
The structure of a special purpose acquisition company (SPAC) generates significant information asymmetry for public investors and provides a special role for its sponsors. Leveraging the unique characteristics of SPACs, this study reexamines the debate over the role of managerial network centrality in affecting M&A outcomes, namely, whether network centrality allows for more private benefits or rather adds value to firms and helps reduce information asymmetry. Specifically, we show that sponsors’ private equity (PE) and venture capital (VC) connections, measured by their network centrality, explain a large portion of postmerger return variation in the cross-section. A one-standard-deviation increase in sponsors’ network centrality leads to a 1.9% higher merger and acquisition success probability and a 1.3% higher postmerger monthly abnormal return. We attribute this outperformance of firms with high managerial PE network centrality to superior fundraising and deal-sourcing abilities. Moreover, this effect is particularly pronounced in a cold market and among SPAC sponsors with more “skin in the game.” Overall, we show that network connections reflect managers’ value-creation ability more than their rent-seeking capacity; these connections can add value to mergers and help alleviate information asymmetry and associated moral hazard issues, especially when managers’ private benefits are closely linked to postmerger firm performance. This paper was accepted by Lin William Cong, finance. Funding: C. Lin acknowledges financial support from the National Natural Science Foundation of China [Grant 72192841] and the Research Grants Council of the Hong Kong Special Administration Region, China [Grant T35/710/20R]. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2024.04492 .