Lora Dimitrova, Senior Lecturer in Finance, University of Exeter
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; SPACs 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 SPACs, 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.
Lora Dimitrova is a Senior Lecturer at the University of Exeter Business School. Her research focuses on entrepreneurial finance, corporate innovation, and venture capital. Her work has been published in top academic journals such as the Journal of Accounting and Economics, and the Journal of Banking and Finance. Her work has won several research grants including the Coller Institute of Venture Research Grant, the British Academy Leverhulme Research Grant and Chaire Fintech AMF Grant. Her research has also been awarded the Coller Institute of Private Equity runner-up prize. Lora earned her PhD in Finance from the London Business School, and her MSc in Finance from Concordia University.