Cycles in the IPO Market: Evidence from KOSDAQ Firms
The performance of Initial Public offering firms differs according to IPO market cycles. According to Yang, Colak, and Wang(2007), it is likely to be related with asymmetry information and adverse selection problem. In this paper, we compare and analyze performance of hot market IPOs and cold market IPOs in KOSDAQ market. The performance will be empirically analyzed by comparing dispersions of the cumulative abnormal returns and buy?and?hold abnormal returns of IPOs during 2000?2007. Quarters with increased number of IPOs are classified as Hot IPO market and result in broader dispersion of abnormal returns than cold market IPOs. Underpricing in hot market IPOs are higher than cold market and this is consistent with many empirical studies of US securities market. Furthermore, hot market has higher delisting rate than cold market and it is also consistent with prior studies.
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