paper, is that when more people adopt a
non-controversial practice, it will become increasingly widespread due to growing awareness and legitimacy. To understand how
controversial practices propagate,
Peggy Lee and I studied the boom-to-bust of reverse mergers. We found that, predictably, increasing adoption of RMs boosted awareness and, in turn, help spread the practice further.
However, the very same awareness also sparked and fuelled concern among third parties – media, investors and regulators. The controversial practice then became increasingly seen as a threat to existing institutionalised practices. That, plus the entry of low-status adopters, eventually stymied reverse mergers and caused them to wane. Similar factors have now converged in the froth of SPACs.