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New Issues in Emerging Markets: Determinants, Effects, and Stock Market Performance of IPOs in Korea

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  • Stephen C. Smith
  • Hesuk Chun

Abstract

This article investigates why Korean companiesgo public and their subsequent performance. Ex ante and ex post evidence suggests firms do notgo public to fund investment in fixed assets. Financially marginal firms are more likely to go public to take advantage of windows of opportunity. Financially healthier independents also go public to rebalance their portfolios. Chaebol (conglomerate) subsidiaries apparently use initial public offerings (IPOs) to fund equity investments and take advantage of windows of opportunity. Buy- and-hold returns show Korean IPOs outperformed the stock market—with the divergence widening over time—in contrast to developed markets.

Suggested Citation

  • Stephen C. Smith & Hesuk Chun, 2003. "New Issues in Emerging Markets: Determinants, Effects, and Stock Market Performance of IPOs in Korea," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 2(3), pages 253-285, September.
    • Handle: RePEc:sae:emffin:v:2:y:2003:i:3:p:253-285
    DOI: 10.1177/097265270300200301
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    References listed on IDEAS

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    Cited by:

    1. Moshirian, Fariborz & Ng, David & Wu, Eliza, 2010. "Model specification and IPO performance: New insights from Asia," Research in International Business and Finance, Elsevier, vol. 24(1), pages 62-74, January.
    2. Saurabh Ghosh, 2005. "The post-offering performance of IPOs in the Indian banking industry," Applied Economics Letters, Taylor & Francis Journals, vol. 12(2), pages 89-94.
    3. Kim, Oksana, 2013. "The global recognition strategy of blue chips of the Russian and Commonwealth of Independent States (CIS) markets," Journal of Contemporary Accounting and Economics, Elsevier, vol. 9(2), pages 151-169.
    4. Mayur, Manas & Kumar, Manoj, 2006. "An Empirical Investigation of Going Public Decision of Indian Companies," MPRA Paper 1801, University Library of Munich, Germany.
    5. Skalická Martina & Zinecker Marek & Pietrzak Michał B. & Meluzín Tomáš & Dohnal Mirko, 2019. "Financial impact analysis of going public at the Warsaw Stock Exchange: Using Fuzzy Set Theory to understand behaviours of mature companies," Management & Marketing, Sciendo, vol. 14(1), pages 59-79, March.
    6. Patrascu (Sandu) Diana – Ramona, 2014. "The Decision Of Going Public – When, Where And Why?," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 1, pages 166-172, February.

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