Insiders Pre-IPO ownership, underpricing, and share-selling behavior: Evidence from Korean IPOs

Sang Koo Kang; Hyung Cheol Kang; Joonghyuk Kim; Noolee Kim

doi:10.1080/1540496X.2015.1039902

Insiders Pre-IPO ownership, underpricing, and share-selling behavior: Evidence from Korean IPOs

Sang Koo Kang, Hyung Cheol Kang, Joonghyuk Kim, Noolee Kim

School of Business Administration

Research output: Contribution to journal › Article › peer-review

7 Scopus citations

Abstract

We examine the effects of insiders ownership type and their pre-IPO ownership changes as well as levels on IPO pricing and insiders share-selling behaviors in the Korean IPO market. We find that insiders direct ownership level is positively associated with underpricing. We also find that when insiders increase their direct ownership in pre-IPO periods, the probability of insiders selling shares after lockup expirations and the amount sold both increase. However, these results do not hold when insiders hold indirect ownership, implying that the role of insiders ownership in IPO is limited to the case of direct ownership in the Korean market.

Original language	English
Pages (from-to)	66-84
Number of pages	19
Journal	Emerging Markets Finance and Trade
Volume	51
DOIs	https://doi.org/10.1080/1540496X.2015.1039902
State	Published - 1 May 2015

Keywords

IPOs
insider selling
ownership
strategic behavior

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10.1080/1540496X.2015.1039902

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title = "Insiders Pre-IPO ownership, underpricing, and share-selling behavior: Evidence from Korean IPOs",

abstract = "We examine the effects of insiders ownership type and their pre-IPO ownership changes as well as levels on IPO pricing and insiders share-selling behaviors in the Korean IPO market. We find that insiders direct ownership level is positively associated with underpricing. We also find that when insiders increase their direct ownership in pre-IPO periods, the probability of insiders selling shares after lockup expirations and the amount sold both increase. However, these results do not hold when insiders hold indirect ownership, implying that the role of insiders ownership in IPO is limited to the case of direct ownership in the Korean market.",

keywords = "IPOs, insider selling, ownership, strategic behavior",

author = "Kang, {Sang Koo} and Kang, {Hyung Cheol} and Joonghyuk Kim and Noolee Kim",

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AU - Kim, Noolee

PY - 2015/5/1

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AB - We examine the effects of insiders ownership type and their pre-IPO ownership changes as well as levels on IPO pricing and insiders share-selling behaviors in the Korean IPO market. We find that insiders direct ownership level is positively associated with underpricing. We also find that when insiders increase their direct ownership in pre-IPO periods, the probability of insiders selling shares after lockup expirations and the amount sold both increase. However, these results do not hold when insiders hold indirect ownership, implying that the role of insiders ownership in IPO is limited to the case of direct ownership in the Korean market.

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Insiders Pre-IPO ownership, underpricing, and share-selling behavior: Evidence from Korean IPOs

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