The Effects of Financial Stability of a Technology-Based IPO Firms on the Stock Price Crash Risk

Hee Jung Hong, Sun Young Park

Research output: Contribution to journalArticlepeer-review

Abstract

This study examines the effect of investor information asymmetry on the stock price crash risk of technology-based IPO firms and analyzes whether the financial stability index can reduce the stock price crash risk of technology-based IPO firms. The results of the study are as follows: First, this study examines technology-based IPO firms have a positive(+) effect on stock price crash risk. Second, we find that the interaction variable of financial stability and technology-based IPO firms have a significant positive(+) effect on stock price crash risk. Third, this study investigates the effect of the interaction variable on the future stock price crash risk is highest in the highest stock price crash risk group. Finally, this study confirms similar results in the additional analysis using PSM. These results mean that technology-based IPO firms with high information asymmetry and financial uncertainty increase the stock price crash risk. Also, this finding suggests when investors invest in technology-based IPO firms, they consider the unique technical factors of firms rather than the financial stability. The results of this study provide implications that government agencies should prepare stable investment policies for technology-based IPO firms, and companies should establish long-term management strategies to enhance financial stability.

Original languageEnglish
Pages (from-to)145-178
Number of pages34
JournalKorean Accounting Review
Volume48
Issue number4
DOIs
StatePublished - 2023

Keywords

  • altman’s Z score
  • finance stability
  • KOSDAQ
  • piotroski’s F_SCORE
  • stock price crash risk
  • technology-based IPO

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