Application from South Korea on the decomposition of the strategic procedure of IPO proceeds

Yousaf Ali Khan and Muneeb Ahmad
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Yousaf Ali Khan: Department of Mathematics and Statistics, Hazara University Mansehra 23010, Pakistan†School of Statistics, Jiangxi University of Finance and Economics, Nanchang, P. R. China
Muneeb Ahmad: ��School of Finance, Jiangxi University of Finance and Economics, Nanchang, P. R. China

International Journal of Financial Engineering (IJFE), 2022, vol. 09, issue 04, 1-15

Abstract: The study’s key aim is to decide what South Korean initial public offering (IPO) issuers indicate as their intended usage of IPO proceeds, as well as the use with the highest amount of allocation, and whether the allocation of IPO proceeds to each intended use varies across industries. In order to fulfil the study’s target, a manual material review of prospectuses from 235 IPO issuers was conducted between 2005 and 2015. Descriptive statistics, one-way analysis of variance, Independent Sample t-test, and Wilcoxon Rank Sum Test were used to evaluate the results. The findings reveal that issuers plan to use IPO proceeds for a range of purposes. Capital investment, on the other hand, earned the largest volume and proportion of IPO proceeds, followed by debt restructuring and company growth. The trend of allocation of IPO proceeds for a particular purpose is affected by the industry classifications of issuers, according to further research using the Independent Sample t-test and Wilcoxon Rank Sum Test, since there is a statistically relevant discrepancy between the mean values of allocation of IPO proceeds across industries. The technology sector, for example, has a statistically higher mean research and development (R&D) score than other sectors. As a result, future research into how the expected usage of IPO proceeds impacts subsequent IPO results will be important.

Keywords: South Korea; operating capital; capital expenditure; loan repayment; IPO proceeds (search for similar items in EconPapers)
JEL-codes: G11 G18 G32 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1142/S2424786322500037

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