This book provides an analysis of the impact on underpricing and long-term performance of venture capital in IPOs, and of the ownership characteristics of venture capital companies. It investigates the performance of IPOs in Korea during the dot-com bubble-and-bust period. The book looks at venture capital firms and their participation, their reputation, and conflicts of interests, particularly in the context of the development of a new secondary stock market in an emerging market and these factors affect the pricing and performance effects of IPO firms.
This book is a useful reference to those interested in promoting an active KOSDAQ type of stock market, and understanding how venture capitalists and their institutional affiliation may reduce information asymmetry and add value of IPO firms.
Table of Contents
2. Institutional Description of the Venture Capital Industry and the IPO Market
3. Literature Review and Formulation of Hypotheses
4. Data and Methodology
5. The Characteristics of IPO Firms on KOSDAQ 1999-2001
7. Long-term Performance
Jaeho Lee is Associate Professor at the Department of International Business and Trade, Kyung Hee University, Seoul, Korea. He was Research Fellow for Centre for Business Research at the University of Cambridge and Birmingham Business School. He won the 2010 Best Paper Award from the Korean Association of Small Business Studies for his paper on venture capital and its impact on firm valuation.
'This is a thorough analysis, using original data sets, of the complex interplay between financial institutions and markets. The Korean secondary stock market, KOSDAQ, during the dot-com bubble and burst between 1999 and 2001 provides the landscape for the study. Lee examines the long-term performance of stocks from IPOs according to the nature and quality of venture capital participation, examining whether underpricing and poor long term performance might be associated with, for example, the type of ownership of venture capital companies. Prior to and during the period, there were significant changes in the sources of Korean company finance, adding interesting, but complicating factors. The findings are highly relevant to governments, regulators, financial analysts, practitioners and historians. The book adds significantly to the broader debate between market efficiency, on the one hand, and agency bias and information asymmetry on the other.' — Emeritus Professor James Slater, Birmingham Business School, University of Birmingham
'This book provides an insightful analysis of venture capital and IPOs in Korea. Professor Lee provides a thorough analysis of data and insightful commentary on the market. Academics, practitioners, and policy makers with an interest in venture capital and IPOs should read this book.' — Douglas Cumming, Professor of Finance and Entrepreneurship, The Schulich School of Business, York University