Abstract
Korean and US IPO markets show significant initial underpricing, accounting for dramatic initial price increases. However, unlike its US counterpart, the Korean IPO market shows considerable market adjusted long-run returns. Hypotheses influenced by Korean institutional and regulatory factors, tested to explain the IPO cumulative returns, suggest that some of the theoretical arguments and empirical regularities observed in the US IPO market also apply to the Korean IPO market. However, this is a function of the regulatory environment in the four periods investigated in this study.
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