SPAC IPOs and Sponsor Network Centrality

• 成果类型: Article; Early Access
• 署名作者: Lin, Chen; Lu, Fangzhou; Michaely, Roni; Qin, Shihua
• 署名单位: University of Hong Kong; European Corporate Governance Institute; Lingnan University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2024.04492
• 发表日期: 2025
• 关键词: IPO; special purpose acquisition company; Network centrality; SPAC

摘要

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-standarddeviation 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.