Effect of General Investors' Allotment Ratio on Underpricing in KOSDAQ IPO Market: 20% rule

코스닥 IPO시장에서 일반투자자 배정비율이 저평가에 미치는 영향: 20% rule

  • Received : 2018.02.22
  • Accepted : 2018.03.14
  • Published : 2018.03.28


This paper studies the relationship between general investors' allotment ratio and underpricing for the companies that were newly listed in KOSDAQ market after the 20% rule, from March 2004 to December 2013, by empirical analysis. It is shown that the excess allotment ratio over 20% has a strong explanatory power for underpricing ratio under the 1% significance level. Furthermore, the general investors' allotment ratio is a significant explanatory variable of underpricing ratio under the 5% significance level. There are many hypotheses about underpricing, however, if underpricing is evident with high allocation ratio for general investors, it can be regarded as a signal of company's confidence in earnings after listing. In conclusion, this study reveals that general investors' allotment ratio can be used as a major explanatory variable that has a significant effect on the degree of undervaluation in the IPO market.


KOSDAQ IPO Market;General Investors' Allotment Ratio;Underpricing;Pearson's Correlation Coefficient;Regression Analysis


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