| Abstract |
This paper examines whether mandatory Korean International Financial Reporting Standards (K-IFRS) adoption in Korea reduces initial public offering (IPO) underpricing. We find that IPO underpricing has increased following the mandatory adoption of K-IFRS in 2011. We also show that this relation is more pronounced for non-chaebol firms, firms not backed by venture capital, and firms in concentrated industries. This suggests that the negative impact of K-IFRS adoption is concentrated on firms with greater pre-adoption information asymmetry. Our results indicate that some policy consideration is needed in order to help investors adapt to the newly adopted standards, especially to those related to firms that seek to go public. (JEL G38, M48) |