A Study of the Long-Term Performance After the Initial Public Offering of Korean Biopharmaceutical Companies

An initial public offering (IPO) is one of the key events in corporate growth because it allows a company to raise external capital in the capital markets. In Korea, in 2005, given the long time it takes for technologically advanced companies to generate sales and profits, the Technology Special Listing (TSL) System was introduced to provide opportunities for sustainable growth through rapid company disclosure. In this study, we used an event study analysis to determine whether there was a difference in long-term performance after the IPO depending on the listing type. We analyzed the Buy-and-Hold Abnormal Return (BHAR) with the controlled company approach for three years after the IPO. As a result of the study, Korean biopharmaceutical companies showed positive performance after the IPO. Ordinary listed biopharmaceutical companies show positive performance for three years after the IPO. On the other hand, TSL biopharmaceutical companies showed negative performance in the first year after the IPO but positive performance in the long term in three years. This study also derived some implications for policymakers, investors, and biopharmaceutical industries.