Do Trust Account Interest Rates Predict SPAC Outcomes?
Open Access
Author:
Barrett, Erin
Area of Honors:
Finance
Degree:
Bachelor of Science
Document Type:
Thesis
Thesis Supervisors:
Stefan M Lewellen, Thesis Supervisor Brian Spangler Davis, Thesis Honors Advisor
Keywords:
Finance Special Purpose Acquisition Companies SPACs Interest Rates SPAC Outcomes
Abstract:
This paper examines the effect of the estimated interest rate of the trust account on the outcome of a special purpose acquisition company (SPAC). This study finds that SPACs with a high estimated interest rate on the trust account have a higher probability of being withdrawn or terminated. This study is the first of its kind to provide statistically significant evidence that there is a positive correlation between interest rates and a failed outcome. These findings contribute to the literature as there are no pre-existing studies focused on the interest rate of the trust account, which is a fundamental part of the SPAC process. The data and results from this study can be utilized and expanded upon in future experiments.
