The Study on how the Repeal of Put-Back Options Affects IPO Underpricing
This study empirically analyzes the impact of put-back options on IPO underpricing using the sample of Korean firms that became public in the Korea Exchange and the KOSDAQ between September 2003 and December 2010. We measure the cumulative abnormal return(CAR) after IPO, and run cross-sectional regression analysis. Our results are following: First, put-back options have something to do with IPO underpricing, and the result supports the Financial Supervisory Service's effort to reinstate put-back options. Second, IPO underpricing affects after IPO CAR, but the impact lasts at most two weeks. Finally, we do not find evidence that IPO underpricng by the repeal of put-back options have a positive impact on CAR.
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