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http://dx.doi.org/10.5762/KAIS.2012.13.4.1640

The Effect of Allocation to Third Parties in Increase of Capital on Stock Price of KOSDAQ Firms  

Cho, Sang-Kwon (Department of Business Administration, Paichai University)
Kang, Ho-Jung (Department of Business Administration, Paichai University)
Publication Information
Journal of the Korea Academia-Industrial cooperation Society / v.13, no.4, 2012 , pp. 1640-1647 More about this Journal
Abstract
The allocation to third parties in increase of capital is increasing in KOSDAQ firms. With this trend, they cause many problems which involves stock price manipulation. Under this condition, this study analyzes stock price reaction by event study to 197 cases of 81 KOSDAQ companies that allocated to third parties in increase of capital between the year of 2007 and 2009. And we find determinants of cumulative abnormal return by using multiple regression. Results of this research are as follows. First, in case of excess return of (-5, +5), it reveals positive excess return significantly at 1% significance level during 4 days before payment day(event day). But it reveals negative excess return significantly at 1% significance level during 5 days after payment day. Second, in case of excess return of (-40, +40), it reveals positive excess return significantly at 1% significance level during 40 days before payment day(event day). But it reveals negative excess return significantly at 1% significance level during 40 days after payment day. Third, in case of excess return of (0, 1 year), it reveals negative excess return significantly at 1% significance level during 1 year after payment day. Fourth, significant determinant of cumulative abnormal return to (-5, +5) was firm size with positive effect. Significant determinants of cumulative abnormal return to (-40, +40) were reserve ratio and debt ratio. Reserve ratio has positive effect But debt ratio has negative effect. Significant determinants of cumulative abnormal return to (0, 1 year) were firm size, debt ratio, reserve ratio. equity ratio to large shareholder. Firm size, debt ratio, equity ratio to large shareholder have negative effect. But reserve ratio has positive effect.
Keywords
KOSDAQ firms; Event Study; Abnormal Return;
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