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Korean Academic Society of Business Administration
[ Article ]
korean management review - Vol. 53, No. 2, pp.265-289
ISSN: 1226-1874 (Print)
Print publication date 30 Apr 2024
Received 25 Sep 2023 Revised 13 Jan 2024 Accepted 19 Jan 2024
DOI: https://doi.org/10.17287/kmr.2024.53.2.265

기술성장상장기업의 기업가치 과대평가 및 최대주주의 지분매각이 주가폭락에 미치는 영향

YouJung Kang ; SungHo Choi
(First Author) Chosun University csh@chosun.ac.kr
(Corresponding Author) Baewha Women’s University 10172@baewha.ac.kr
The Effect on Stock Price Crash Risk of Overvaluation and the Largest Shareholders Stocks Sale of Technology Growth Company


Copyright 2024 THE KOREAN ACADEMIC SOCIETY OF BUSINESS ADMINISTRATION
This is an open access article distributed under the terms of the Creative Commons Attribution License 4.0, which permits unrestricted, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

New investors of technology growth listings firm allocate capital towards the potential future market value, despite the modest prospects for success in innovative technologies. Nevertheless, when the lock-up period expires, and major shareholders along with affiliated parties promptly divest their shares, investors tend to develop a pessimistic outlook regarding the prospects of technology success and commercialization. Furthermore, as reported profits fall short of the estimated earnings utilized in the company’s valuation during listing, investors are more inclined to harbor a negative view of its future value. Hence, this study investigates whether the risk of a stock price decline escalates when major shareholders and affiliated parties of technology growth-listed firms divest their holdings post-lock-up period. Additionally, we explore whether this risk intensifies further when estimated earnings are overstated, and major shareholders and affiliated parties sell their shares following the lock-up period. The analytical findings reveal that the risk of a stock price decline increases as major shareholders and affiliated parties of technology growth-listed companies divest their holdings after the lock-up period. Furthermore, it becomes evident that this risk surges even higher when estimated profits are inflated, and major shareholders and affiliated parties dispose of their shares post-lock-up period.

Keywords:

technology growth company, pro forma financial statements, largest shareholder, lock-up, stock price crash risk

Acknowledgments

This work was supported by the Ministry of Education of the Republic of Korea and the National Research Foundation of Korea (NRF-2022S1A5A2A01043591)

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∙ The author SungHo Choi is an associate professor in the department of business administration at Chosun University. He obtained a Ph.D. degree from Sungkyunkwan University. The main research area is financial accounting.

∙ The author YouJung Kang is currently serving as an assistant professor in the Department of Tax Accounting at Baehwa Women's University. She completed her Ph.D. in Business Administration from Chosun University. Her main research focus is in financial accounting.