Performance of ESG SPACs

We examine one special focus of Special Purpose Acquisition Companies (SPACs), namely environmental, social and governance (ESG) related investments. By collecting data from several sources on 1,737 SPAC IPOs formed between 2003 and 2022, we classify SPAC’s focus on ESG based on declared focus in SEC (Securities and Exchange Commission) filings and in post-merger annual reports. In our sample, only 50% of SPACs that announce an intention to acquire an ESG focused target ended up fulfilling that goal. In their post-merger operating performance, we find that ESG SPACs perform worse than non-ESG SPACs. Further, while both groups have negative post-merger stock performance, the ESG focused firms perform over 11% lower than non-ESG firms over one event year from the beginning of merged firm’s existence