University of Cambridge > > Finance Seminars, CJBS > THE VALUE OF EXECUTIVE VISIBILITY


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We examine the effect of executive visibility on firm value, using Special Purpose Acquisitions Companies (SPACs) as a laboratory that allows us to separate the effect of executive’s public profile, from that of the firm. We capture executive visibility using SPAC sponsors presence in the main business press, on the Internet (Google and Wikipedia), and on social media (LinkedIn and Twitter). The results show that investors prefer visible executives, as sponsors with the highest visibility raise approximately 25.47% more funds and close the IPO 10 days faster relative to sponsors with the lowest visibility. Visibility is also positively correlated with firm performance; SPA Cs with the most visible sponsors gain 47% higher abnormal merger announcement returns compared to those with the least visible sponsors. We also find that institutional investors trade on sponsor visibility, by selling all SPA Cs, but those with the highest visibility sponsors, which they initially buy, pump up the price, attract retail investors, and eventually dump most shares prior to the merger completion.

This talk is part of the Finance Seminars, CJBS series.

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