Are SPAC Revenue Forecasts Informative?

Michael Dambra, Omri Even-Tov, Kimberlyn MunevarAccounting财务报告UTD24

The Accounting Review2023-07-21University at Buffalo, State University of New York; University of California, BerkeleyDOI

Citations29

ABSTRACT This paper examines the informativeness of special purpose acquisition company (SPAC) revenue forecasts. We document a positive association between the compound annual growth rate in revenue forecasts and abnormal returns, retail trading, and Twitter activity in the five-day window surrounding the disclosure of a merger announcement. By contrast, we find limited evidence that institutional investors and traditional information intermediaries respond to SPAC revenue forecasts. We also find evidence that SPAC revenue forecasts positively predict future operating underperformance, stock underperformance, and class action lawsuits. Overall, our results affirm the SEC’s concerns about the attractiveness of aggressive revenue projections to retail investors. JEL Classifications: G34; G32; M40; M48.

RevenueBusinessStock (firearms)IntermediaryFinanceMonetary economicsEconomicsAuditing, Earnings Management, GovernanceFinancial Markets and Investment StrategiesCorporate Finance and Governance