Is there the Difference of IPO Underpricing between KOSPI and KOSDAQ Market ?

Chi-Seung Song

doi:10.23842/jif.2018.29.2.004

Journal of Insurance and Finance

2018, 29(2), pp.103-134
DOI :10.23842/jif.2018.29.2.004
Publisher : Korea Insurance Research Institute
Research Area : Business Management

Chi-Seung Song ¹

¹ 원광대학교

ABSTRACT

This research is to investigate the difference of IPO underpricing between listing markets for IPO firms from 2000.1 to 2015.12 in KOSPI and KOSDAQ market using different methods from previous papers(for example, usage of bid distribution date that earlier studies have ignored, employing 4 cumulative excess returns from IPO price to the first date, 10, 20, 30 days after listing to avoid the distortion of measuring date on the IPO excess return, and so on.) For the purpose of the study, I employ regression model considering the fixed effect of year and industry, after controlling other variables to influence IPO underpricing. The results from the study on the difference of IPO underpricing between KOSPI and KOSDAQ market are as follows; First, IPO firms from KOSPI market have less underpricing than those from KOSDAQ market for the only period before the abolition of put-back option system. Second, this study finds that there is a significant reduction of the level of underpricing after the abolition of put-back option system, especially for KOSDAQ market. This suggests that this change of system contributes to the efficiency of Korean IPO market. Third, I find that there is the certification effect of venture capital on the mixed sample based on IPO firms listed in KOSPI or KOSDAQ market.
KEYWORDS

KOSPI market , KOSDAQ market , IPO underpricing , Venture capital , Underwrite
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