The Accounting Review Vol. 98 No. 7 2023

Are SPAC Revenue Forecasts Informative?

Michael Dambra¹; Omri Even-Tov²; Kimberlyn Munevar²

¹ University at Buffalo SUNY · ² University of California, Berkeley

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.

DOI

10.2308/tar-2021-0630

Volume

98

Issue

7

Pages

121-152

Language

en

Sources

openalex bibtex:phds-export.bib crossref

Cite

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