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IPO Underpricing Analysis Using a Selection Model: Korean Evidence

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  • Hyunsoo Joo
  • Hyunjin Lee

Abstract

Using IPO and external audit companies’ data in Korea from 2001 to 2020, we used an empirical test to understand which factors can explain underpricing in Korean stock markets. Our conclusions are as follows: first, selection bias is important in the IPO analysis and the sample selection model shows the best results. Second, we find that nonlinear relationships between explanatory variables and cumulative adjusted returns (CARs). Surprisingly, almost all of the variables included in the model were statistically significant. Finally, this clear relation persists upto 1 year after the IPO.

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  • Hyunsoo Joo & Hyunjin Lee, 2022. "IPO Underpricing Analysis Using a Selection Model: Korean Evidence," Global Economic Review, Taylor & Francis Journals, vol. 51(1), pages 43-60, January.
    • Handle: RePEc:taf:glecrv:v:51:y:2022:i:1:p:43-60
    DOI: 10.1080/1226508X.2021.2015420
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    Cited by:

    1. Xuan, Ziyue & Guo, Wenting & Lan, Faqin, 2023. "Underwriters interest binding and IPO underpricing," Finance Research Letters, Elsevier, vol. 57(C).

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