• The Korean Journal of Financial Management
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• v.13 no.1
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• pp.285-309
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• 1996

Using initial public offerings of 512 UK companies newly admitted to London Stock Exchange between 1985 and 1990, we explored the reason of underpricing of new issues. We particularly examined the underpricing of new issues in terms of signalling hypothesis. We found that there is a positive relationship between the value of the issuing firms and the fraction of equity retained by entrepreneurs. This finding is consistent with Leland and Pyle's model(1977) and the evidence of Downes and Heinkel(1982). We also found a positive association between the firm value and the degree of underpricing. In addition, our empirical evidence revealed that the underpricing of the UK IPOs is positively related to the fraction of equity retained by the original shareholders. Thus, our results support Grinblatt and Hwang's model(1989) which predicts a positive relationship between the value of firm and the degree of underpricing.

• The Journal of Asian Finance, Economics and Business
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• v.7 no.12
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• pp.131-138
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• 2020

In accordance with huge demand for capital to meet the expansion of steel production, there are more and more steel companies who have officially listed their stocks in HOSE and HNX. One of the key issues in successful initial public offerings and seasonal offerings for these companies is how to make stocks of steel companies become more attractive in the eyes of investors. The purpose of this research is to analyze the determinants of share prices of listed steel companies in Vietnam. This study utilized macro-economic variables, ratios and indicators representing characteristics of steel industry collected from Quarter 1/2006 to Quarter 4/2019 in association with the panel data and the feasible generalized least square (FGLS) model to evaluate the degree of these factors on the share prices. The results of the research show that ROE, Cons_rate, and CO2_rate are three main factors affecting the share prices of listed steel companies. Among which, ROE and Cons_rate have a positive effect, while CO2_rate has a negative effect on the share prices of listed steel companies. It also confirms the relationship between the environmental factor, construction industry factor and the stock prices. This lays foundations for recommendations for the future policies towards environmental protection and sustainable development.

• 한국공간정보시스템학회:학술대회논문집
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• 2005.05a
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• pp.351-354
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• 2005

NASA's remote sensing market analysis and forecast projects 3.3 billion dollars in 2005. On the other hand, a market research firm expected that world commercial remote sensing imagery, GIS software, Data, and value-added services will generate 8.3 billion dollar in 2007. It has been widely believed that geo-spatial information and service market is growing rapidly and has a huge potential, but it is not clearly understood where it is now and will be heading in the future. Also, it could be a significant question to answer where the industry in Korea fits the best in the world business trends and where it should be strategically heading to take a large market share. Furthermore, if it could be worth being considered as a Korean strategic industry for the future. Instead of pursuing direct answers to the questions, the author will start reviewing general business practices, major business transactions such as merging and acquisitions (M&A's) and initial public offerings (IPO's), and research on market capitalization and revenue of major companies. Throughout the study, a list of common grounds in the market was uncovered and realized as follows: (1) value-added data matters in geo-spatial information and service market; (2) private sector grows faster; (3) characteristics of multi-national industry; and (4) Dependency on major industry. Based on the findings, the author presents a list of recommendations as conclusions.

• The Korean Journal of Financial Management
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• v.11 no.2
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• pp.223-257
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• 1994

본 연구는 최초공모주식의 저가발행 원인에 대한 보험가설을 미국에서의 실제 소송사례를 중심으로 실증분석한다. Tinic(1988)은 최초공모주의 저가발행이 공모에 따르는 법률적 소송위험과 소송으로 인한 간사회사의 명예손상에 대한 일종의 보험효과를 가지고 있으며, 따라서 저가발행의 크기는 소송위험과 음의 관계에 있다고 주장한다. 또한 보험가설에 의하면 실제 소송이 발생했을 경우에도 저가발행의 크기는 소송결과에 유리하게 작용한다고 한다. 본 연구에서 는 1933-1990 기간동안 미국증권법 제 11조 조항을 위반하여 소송이 제기되었던 사례가운데 실제소송의 결과가 알려진 판례를 중심으로 보험가설의 주장을 실증분석 하였다. 또한 최초공모이후의 공모시장을 통한 기업자금 조달시에 주간사회사의 변경여부를 분석함으로써 소송으로 인한 간사회사의 명예손상의 정도를 파악하고자 했다. 연구결과에 따르면 투자자들에 의한 집단소송의 결과와 최초공모주의 저가발행의 크기에는 유의적인 관계가 있음이 실증적으로 제시되었다. 또한 간사회사의 명성과 실제 현금으로 환원한 소송위험간에도 유의적인 관계가 있음을 보여주고 있다. 한편 소송에 관련된 최초공모주의 경우에는 일단 소송이 제기된 후의 공모를 통한 추가기업자금 조달시에 기존의 간사회사를 전원 교체하는 등 통제집단과는 다른 형태를 보여 줌으로써 보험 가설의 주장을 지지하고 있다.

• The Korean Journal of Financial Management
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• v.17 no.2
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• pp.71-98
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• 2000

본 연구는 1988년 6월부터 1994년 12월까지 우리나라 주식시장에 상장된 267개 최초공모주 를 대상으로 3년간 성과를 분석하고 그리고 이들 기업들이 채택한 이익관리방법에 따라 성과에 차이가 나는지를 분석하였다. 실증분석 결과, 누적초과수익률(CAR)로 추정한 최초공모주의 장기성과는 양(+)의 초과성과를 매입보유초과수익률(BHAR)로 추정한 경우에서는 저성과를 보였으나 통계적으로 유의하지는 않았다. 그리고 공개기업의 이익관리방법에 따라 성과에 차이가 나는지를 보기위해 표본기업 267개 기업중 기업의 결산시점이 달라 분석이 어려운 기업들을 제외한 후 219개 기업을 표본으로 하여 누적초과수익률(CAR)과 매입보유초과수익률(BHAR)로 분석한 결과, 두 모형 모두에서 기업의 이익을 공격적으로 관리한 기업(DCA2)의 성과가 이익을 보수적으로 관리한 기업(DAC1)의 성과보다 낮게 나타났으나 통계적으로 유의하지는 않았다. 이상의 결과에 대해 명확한 해석을 내리기에는 기업의 제반환경 및 여건 등이 영향을 미칠 수 있어 어려움이 따르나 고려할 수 있는 이유 중 하나로 최초공모주 기업들이 공개에 앞서 기업성과를 과대계상하거나 또는 매출액 및 이익부풀리기 등과 같은 분식회계처리방법이 한 요인이 된 것으로 해석할 수 있다.

• The Journal of Asian Finance, Economics and Business
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• v.8 no.1
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• pp.237-246
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• 2021

This paper explores the relationship between price mechanism and flipping activity of initial public offerings (IPOs) in Pakistan's emerging economy. This study uses a cross-sectional data set of 95 firms listed on Pakistan Stock Exchange from 2000 to 2019. This study employs the ordinary least square and quantile regression techniques to capture the relationship between price mechanism and flipping activity. The results show that book-built IPOs flip substantially less than fixed-price IPOs. This is consistent with the signaling theory assertion that roadshows are arranged by underwriters to capture investors' demand and set the offer prices of IPOs. If investors learn the fair values of quality IPOs, then the offer prices will be close to the intrinsic values, thus reducing flipping. The findings also provide conclusive evidence for understanding the usefulness of and the more relevant information regarding the pricing mechanism. In particular, it provides a better understanding of how companies actually use the pricing mechanism information in the flipping of IPO shares. The results of this study are also valuable to underwriters, and regulators, for instance, provides underwriters with the discretion to allocate the IPO shares and the SECP, in revising regulation on the disclosure of IPO pricing methods.

• Korean Business Review
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• v.11
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• pp.217-239
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• 1998

The intial public offerings(IPO) issued by going public must be decided duly and seriously. In these sense, this paper reviewed and analysed synthetically the theories and the empirical studies on the IPO. The implications about the empirical studies on the IPO in korea stock exchanges(KSE) are as follows: First, evaluating the IPO's intrinsic value, the issued firm's characteristics(style, scale, age, reevaluation and goodwill etc.) and business environments(industry, economic states, regulations and the relation with government etc.) will be considered. Evaluating the IPO's relative value, the stock price of firms registered in KOSDAQ market will be appreciated. Second, the income smoothing of an IPO listed in KSE accrued in the first and second years. Accordingly if auditors audit the accounting reports of firms to list in KSE by going public, they should more concern to the income smoothing on the accounting reports. Third, the information accuracy of investment banks and the qualities of auditors negatively correlated with the underpricing of an IPO. It is need to promote the information accuracy of investment banks and the qualities of auditors. Regulatory organizations support to promote the information accuracy of investment banks and the qualities of auditors. Forth, the investors interested in the IPO are to recognize the follows. (1) Relations between the underpricing of an IPO and the ratio of public participation, the issue price, the offer size, the insider ownership, the net asset value per share, the price decision system of an IPO. (2) An entrepreneurs who decided to bring his firm public would like to issue the IPO when company's operating conditions are good.

• Asia-Pacific Journal of Business
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• v.11 no.2
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• pp.173-188
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• 2020

Purpose - This study examines the determinants of offer price and short-term and long-term performance of small and medium-sized enterprise(SME) IPO stocks listed on the KOSDAQ during the period from July 2007 to December 2016. Design/methodology/approach - The SME IPO samples are classified into three categories of regular listing, technology-based special listing, and listing by merger with special purpose acquisition company(SPAC), whose results are compared each other and compared to the result for the KOSDAQ listing of large firms. Findings - From the point of SME management which attempts to list its company on the KOSDAQ, the listing by merger with SPAC is the most unfavorable, and the underpricing phenomenon of the technology-based special listing is severe in the second place. By contrast, IPO stock investors can earn the largest abnormal return by purchasing the SPAC which succeeds the merger with unlisted firm, and the next abnormal returns are obtained in the order of the IPO stocks of technology-based special listing, regular listing of SMEs, and regular listing of large firms. However, it is interesting to observe that the net buying ratio of individual investors is relatively large for the IPO stocks of regular listing of SMEs and large firms, which exhibit the long-term under-performance. Research implications or Originality - This result implies that the exceptional listing system such as the technology-based special listing or the listing by merger with SPAC cost the SMEs which bypass the complicated procedure of the regular listing.

• KDI Journal of Economic Policy
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• v.12 no.2
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• pp.95-120
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• 1990

The underpricing of new shares of a firm that are offered to the public for the first time (initial offerings) is well known and has puzzled financial economists for a long time since it seems at odds with the optimal behavior of the owners of issuing firms. Past attempts by financial economists to explain this phenomenon have not been successful in the sense that the explanations given by them are either inconsistent with the equilibrium theory or implausible. Approaches by such authors as Welch or Allen and Faulhaber are no exceptions. In this paper, we develop a signalling model of capital investment to explain the underpricing phenomenon and also analyze the efficiency of investment. The model focuses on the information asymmetry between the owners of issuing firms and general investors. We consider a firm that has been owned and operated by a single owner and that has a profitable project but has no capital to develop it. The profit from the project depends on the capital invested in the project as well as a profitability parameter. The model also assumes that the financial market is represented by a single investor who maximizes the expected wealth. The owner has superior information as to the value of the firm to investors in the sense that it knows the true value of the parameter while investors have only a probability distribution about the parameter. The owner offers the representative investor a fraction of the ownership of the firm in return for a certain amount of investment in the firm. This offer condition is equivalent to the usual offer condition consisting of the number of issues to sell and the unit price of a share. Thus, the model is a signalling game. Using Kreps' criterion as the solution concept, we obtained an essentially unique separating equilibrium offer condition. Analysis of this separating equilibrium shows that the owner of the firm with high profitability chooses an offer condition that raises an amount of capital that is short of the amount that maximizes the potential profit from the project. It also reveals that the fraction of the ownership of the firm that the representative investor receives from the owner of the highly profitable firm in return for its investment has a value that exceeds the investment. In other words, the initial offering in the model is underpriced when the profitability of the firm is high. The source of underpricing and underinvestment is the signalling activity by the owner of the highly profitable firm who attempts to convince investors that his firm has a highly profitable project by choosing an offer condition that cannot be imitated by the owner of a firm with low profitability. Thus, we obtained two main results. First, underpricing is a result of a signalling activity by the owner of a firm with high profitability when there exists information asymmetry between the owner of the issuing firm and investors. Second, such information asymmetry also leads to underinvestment in a highly profitable project. Those results clearly show the underpricing entails underinvestment and that information asymmetry leads to a social cost as well as a private cost. The above results are quite general in the sense that they are based upon a neoclassical profit function and full rationality of economic agents. We believe that the results of this paper can be used as a basis for further research on the capital investment process. For instance, one can view the results of this paper as a subgame equilibrium in a larger game in which a firm chooses among diverse ways to raise capital. In addition, the method used in this paper can be used in analyzing a wide range of problems arising from information asymmetry that the Korean financial market faces.

• The Journal of Small Business Innovation
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• v.20 no.3
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• pp.1-17
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• 2017

There is a serious information asymmetry between internal managers and outside investors in the process during IPOs. One mechanism that mitigates this information asymmetry is a high quality auditor. Since prior research document auditors' effect on newly listed firms at the IPO year, what has not yet been revealed in previous studies is the behavior of firms and auditors after listing. In this study, we investigate (i) the firms tendency of contracting with Big N auditors, and (ii) the effect of Big N auditors on accounting quality after the years of IPOs. Using a sample of 7,678 (1,892 firm-years of after IPOs, and 5,786 control firm-years) KOSDAQ observations between 2002 and 2012, we find that the likelihood of contracting with Big N auditor lasts only for two years after IPO compare to that of non-IPO control years. Secondly, we find that the effect of Big N auditors on clients' earnings management lasts for a very short period after IPO. These findings suggest that although prior literature argue that Big N auditors reduce earnings management of their clients, at least the period right after IPO, it is not consistent. Our study contributes to the existing literature in several ways. First, we provide new evidences of firms' auditor selection decisions by investigating years after the listing. In second, as an evidence of accruals reversal, we document decrease in discretionary accruals after IPOs. Third, we find that there is not always a positive relation between Big N auditor and accounting quality by showing the insignificant Big N auditor effect after IPOs. Our results also suggest several implications to IPO related stakeholders. First, to IPO firms, we provide evidences that decisions of hiring auditors affect firms earnings. Also, lead IPO underwriters may consider how these decisions influence future performance. Second, investors may want to use information not only in the preofferings but also after public offerings. Our study insists that auditor hiring decisions affects their own welfare. Finally, accounting standard setters may find these results useful for evaluating how much discretion they should allow corporate managers to hire auditors. In addition, our result casts doubt on auditor designation.