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Would it be helpful to have credit ratings to prevent the initial public offering underpricing?

Title
Would it be helpful to have credit ratings to prevent the initial public offering underpricing?
Authors
Seo S.-K.Choi H.-S.Woo W.
Ewha Authors
우원석최형석
SCOPUS Author ID
우원석scopus; 최형석scopus
Issue Date
2017
Journal Title
Journal of Applied Economic Sciences
ISSN
1843-6110JCR Link
Citation
Journal of Applied Economic Sciences vol. 12, no. 1, pp. 222 - 238
Keywords
Credit rating; Heckman model; Information asymmetry; Initial public offering (IPO); Underpricing
Publisher
ASERS Publishing House
Indexed
SCOPUS scopus
Document Type
Article
Abstract
In this study, the effect of the credit rating on the IPO pricing has been analysed. The analysis of the companies which were listed in Korea Exchange and made IPO from 2002 to 2014, found out that the companies which had the credit rating had less underpricing IPOs than those which did not have. The results showed that the underpricing IPO has nothing to do with the level of credit rating and the difference in the credit rating entities and that the existence of the credit rating itself plays a big role in removing the uncertainties and information asymmetry on the corporate values. Same as the final underpricing IPO, the companies which have the credit rating were also found to have less adjustments of the public offering price during the period of demand forecasting. These results show that the credit rating plays a big role in removing the information asymmetry in the IPO market. © 2017, ASERS Publishing House. All rights reserved.
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스크랜튼대학 > 국제학부 > Journal papers
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