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http://dx.doi.org/10.5762/KAIS.2012.13.1.156

The Ex-ante and Ex-post Effects of the Price Stabilization Policies on IPO underpricing in KOSDAQ Markets  

Kim, Soo-Hyun (The Small and Medium Business Corporation)
SonU, Suk-Ho (School of Business, Hongik University)
Publication Information
Journal of the Korea Academia-Industrial cooperation Society / v.13, no.1, 2012 , pp. 156-163 More about this Journal
Abstract
The price stabilization policies which require the underwriters to maintain post-IPO prices at some level (stabilization duty) or give put-back options to investors, have survived for eight years until June, 2006. The purpose of this study is to analyze the effect of price stabilization policies upon IPO underpricing in KOSDAQ. The study decomposes the influence of the price stabilization policies on IPO underpricing into ex-ante and ex-post effect. The price stabilization policies have shown to increase the IPO underpricing both at ex-ante and ex post bases. And the ex-ante effect is greater than ex-post effect. Among policies, the price stabilization duty magnifies the underpricing more than put-back option. This study differentiate from the precedented studies by including the whole period in which those policies are in act and by decomposing the IPO underpricing effects into ex-ante and ex-post bases.
Keywords
IPO Underpricing; Price Stabilization Policy; Put-back Option; Underwriter;
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