Abstract
We examine the effect of first official SEC announcement regarding Special Purpose Acquisition Companies (SPACs), which is an alternative mechanism of taking firms public and suggested to enjoy a regulation gap compared to its counterparts. If so, a big adverse effect may be expected at the time of the first regulatory intervention. Our results do not show support for this hypothesis; however, we find that some SPAC characteristics lead to significantly worse returns in a multivariate setting. Interestingly, despite the regulation targeting warrant accounting directly, we find that offering warrants in SPAC units have a positive impact on announcement returns.
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