We examine whether firms switching their listings from the new market (KOSDAQ) to the main board (KOSPI) of the Korea Exchange (KRX) experienced a sufficient improvement in trading-related market quality to justify the switch. Focusing our analyses on the market macrostructure and using a difference-in-difference (DID) technique based on fixed-effect estimation, we obtain the following results. First, for the overall sample period (1999 through 2010), we find that the trading-related market quality mostly deteriorated following the switch from KOSDAQ to KOSPI. Second, the deterioration became more pronounced after KOSDAQ and KOSPI were consolidated into KRX in 2005; this conclusion is also supported by a comparison of the listing switches of two KOSDAQ flagship firms (NCsoft and NHN). Our results support two policy conclusions: Firms whose characteristics fit the new market should continue to be traded on the new market. Policymakers should carefully monitor the dynamic changes in characteristics and range of the target firms of the new market and nurture the new market as their country’s economy evolves.
Keywords: Listing switch; Market quality; Market macrostructure; Matching technique; Fixed-effect estimation; Difference-in-difference
학회소식
[2012년 제 4차] The effect of a listing switch from a new market to
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게시일 :
2012-12-12
