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The Korean IPO Market: Initial Returns

Author

Listed:
  • Byung-Ju Kim

    (Lehigh University, USA)

  • Richard J. Kish

    (Lehigh University, USA)

  • Geraldo M. Vasconcellos

    (Searing Professor of Finance and Economics, Rauch Business Center, Lehigh University, USA)

Abstract

Most Korean IPOs show significant initial underpricing which accounts for high initial returns. Our study explores the institutional and regulatory factors that have affected both the offering and after-market pricing mechanisms to test several hypotheses that might explain this underpricing in the Korean IPO market. We find a systematic difference in the initial stock price performance of new issues in an environment where firms have different motives for going public. We also find that in less regulated periods, the explanatory power of the variables relating to both the signaling and ex ante uncertainty hypotheses increase.

Suggested Citation

  • Byung-Ju Kim & Richard J. Kish & Geraldo M. Vasconcellos, 2002. "The Korean IPO Market: Initial Returns," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 5(02), pages 219-253.
    • Handle: RePEc:wsi:rpbfmp:v:05:y:2002:i:02:n:s0219091502000730
    DOI: 10.1142/S0219091502000730
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    Citations

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    Cited by:

    1. Cho, Jaemin & Lee, Jaeho, 2013. "The venture capital certification role in R&D: Evidence from IPO underpricing in Korea," Pacific-Basin Finance Journal, Elsevier, vol. 23(C), pages 83-108.
    2. Hwang, Joon Ho & Kim, Joohwan & Park, Jinwoo, 2021. "Underwriters’ price support regulation and institutional investors’ trading: The case of the putback option," Research in International Business and Finance, Elsevier, vol. 57(C).
    3. Hon-Wei Leow & Wee-Yeap Lau, 2018. "The Impact of Global Financial Crisis on IPO Underpricing in Malaysian Stock Market," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 21(04), pages 1-17, December.

    More about this item

    Keywords

    IPO; Korea; Returns;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance

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