Unintended regulatory consequences: Evidence from the Korean IPOs

作者：Chang Kiyoung; Kim Yong Cheol; Kim Young Sang^*; Thornton John H Jr

来源：Pacific-Basin Finance Journal, 2012, 20(2): 292-309.

DOI：10.1016/j.pacfin.2011.10.002

• IPO
• Underpricing
• Book building
• Institutional investor
• Regulatory changes

We examine IPOs in Korea during the period August 2000-January 2002. We conclude that the high level of underpricing in Korean IPOs is the unintended consequence of regulations designed to promote fairness. Two aspects of the regulations distort the process an "essential price" formula that severely understates the value of the firm; and, bid exclusion rules that give investors a strong incentive to cluster their bids so as to avoid being excluded from the offering. During our sample period the rules were changed somewhat. The result was a change to gaming behavior and somewhat less underpricing.

• 出版日期2012-4