Abstract
This study empirically examined whether underwriters’ reputations affect the sustainability of newly listed firms, focusing on firm delisting risk using survival analysis. It was hypothesized that newly listed firms with more reputable underwriters would prove more sustainable, and this hypothesis was tested using a sample of firms that were newly listed on the Korea Composite Stock Price Index (KOSPI) and the Korea Securities Dealers Association Automated Quotation (KOSDAQ) markets in South Korea between 2001 and 2012. The data collected and used to test the aforementioned hypothesis were from 2001 to 2017. The analysis showed that newly listed firms with more reputable underwriters have lower delisting risk. This implies that newly listed firms with more reputable underwriters enjoy greater sustainability. This study meaningfully contributes to sustainability research by rationally explaining why underwriters’ incentives to maintain their reputations improve newly listed firms’ business and financial status. This study differs from other management studies in that it produced meaningful results using survival analysis, which has not been widely used in conventional management studies. Its findings also contribute in terms of identifying the possibility that underwriters’ reputations can be used as a predictor of the possibility of delisting newly listed companies.
Highlights
Business entities accumulate revenues through operating activities and often reinvest revenues in operating activities by capitalizing on them to acquire additional sources of revenue
This study examined many indirect elements, including the reputations of underwriters deeply involved in new listing processes
Only a few studies have examined the viability of newly listed companies by underwriters who are responsible for all business related to the listings themselves as well as the newly listed companies. Given this gap in the current research, this study focused on the significant impact of underwriters on the financial and legal soundness of newly listed companies, empirically analyzing the following hypothesis: Hypothesis 1
Summary
Business entities accumulate revenues through operating activities and often reinvest revenues in operating activities by capitalizing on them to acquire additional sources of revenue These processes allow them to continue their operations. Generating immediate profit by making such investments can prove difficult In such cases, entities need significant amounts of money to support their ongoing operations and growth, and one method they use before being listed on the capital market is acquiring financing through new listings [1]. From firms’ perspectives, the success of new listings involves raising funds and establishing foundations for future growth potential to solidify the possibility of continuing operations. The selection of pre-listed brokers (underwriters) is mandated by law
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
