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Unit Ipo'S: A Case Of Specified Purpose Acquisition Companies (Spacs)

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  • Mirjana Cizmovic
  • Milan Lakicevic
  • Milos Vulanovic

Abstract

Unit initial offerings are innovative way to finance corporate activities in capital markets and are usually conducted by companies that carry a high level of asymmetry information. The degree of information asymmetry insignificantly impacts the pricing at the IPO day in our sample. In addition to outlying the structure of Unit IPO we document behavior of underwriters in this process and shed the light on their incentives through time. We find that the most successful underwriters are relatively small investment banks by size that have a niche in this market. In addition we find that the structure of offering is changing and underwriters are using fewer warrants in designing as well as charging lower fees for their services.

Suggested Citation

  • Mirjana Cizmovic & Milan Lakicevic & Milos Vulanovic, 2013. "Unit Ipo'S: A Case Of Specified Purpose Acquisition Companies (Spacs)," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 9(1), pages 45-52.
    • Handle: RePEc:mje:mjejnl:v:9:y:2013:i:1:p:45-52
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    References listed on IDEAS

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    1. Chemmanur, Thomas J. & Fulghieri, Paolo, 1997. "Why Include Warrants in New Equity Issues? A Theory of Unit IPOs," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 32(1), pages 1-24, March.
    2. Schultz, Paul, 1993. "Unit initial public offerings *1: A form of staged financing," Journal of Financial Economics, Elsevier, vol. 34(2), pages 199-229, October.
    3. Lakicevic, Milan & Vulanovic, Milos, 2012. "A Story on SPACs," EconStor Preprints 65843, ZBW - Leibniz Information Centre for Economics.
    4. Shane A. Corwin & Paul Schultz, 2005. "The Role of IPO Underwriting Syndicates: Pricing, Information Production, and Underwriter Competition," Journal of Finance, American Finance Association, vol. 60(1), pages 443-486, February.
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