THE OWNERSHIP STRUCTURE OF KOREAN FIRMS AFTER AN INITIAL PUBLIC OFFERING
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After an initial public offering(IPO), the ownership structure of Chaebol firms differs substantially from that of other Korean independent firms. The mean percentage holding of stock by large outside block holders for Chaebol firms is 7.77%, whereas the mean percentage of large outside block holders for independent firms is 14.02%. Managers of Chaebol firms appear to maintain control of IPOs by distributing shares to small individual investor through IPO underpricing. The evidence is consistent with that of managers of Korean independent firms who seek the benefits of monitoring by outside block holders. We show that this monitoring is efficient as these independent firms achieve higher long-term post-IPO returns.
Abstract
After an initial public offering(IPO), the ownership structure of Chaebol firms differs substantially from that of other Korean independent firms. The mean percentage holding of stock by large outside block holders for Chaebol firms is 7.77%, whereas the mean percentage of large outside block holders for independent firms is 14.02%. Managers of Chaebol firms appear to maintain control of IPOs by distributing shares to small individual investor through IPO underpricing. The evidence is consistent with that of managers of Korean independent firms who seek the benefits of monitoring by outside block holders. We show that this monitoring is efficient as these independent firms achieve higher long-term post-IPO returns.