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Reform of the IPO market in Korea

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Frame of Image s well as underpricing in the IPO occurs frequently as it is hard to determine the offer price, which takes into account the information from institutional investors participating in the bookbuilding process. As a result, the interests of the issuer or investors may be hurt. □ In Korea, the IPO system has undergone two major reforms in 2007 and 2011, allowing greater discretion for underwriting firms. However, the reforms did not include measures for underwriting firms to prevent the investors’ loss. □ To safeguard the interests of investors, it should be considered whether to revive a put back option or to introduce a mandatory holding period of shares for underwriting firms. Also, to promote fair pricing, underwriting firms should be able to limit participation of institutional investors in the bookbuilding process and have discretion on allotments of shares. Lastly, to enhance soundness of the IPO market, underwriting firms should step up internal control system and expertise in the IPO business.
* Opinions expressed are those of the author and do not necessarily reflect the official positions of the Korea Institute of Finance.
Introduction
Since the 2008 global financial crisis, the IPO market in Korea has shown a lackluster performance. To make things worse, the prolonged eurozone debt crisis brought a further chill to the IPO and stock markets. Backed by generous Recently, the IPO market in Korea has slumped, and investor trust plunged due to poor investment results. go


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Title Reform of the IPO market in Korea
Similar Titles
Material Type Reports
Author(English)

Kang, Jong Man

Publisher

Korea Institute of Finance

Date 2012-10
Journal Title; Vol./Issue Weekly Financial Review:21/40
Pages 10
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Economic System
Economy < Direct Investment
Holding Korea Institute of Finance