2016-04: The effect of listing switches from a growth market to a main board: An alternative perspective


We examine whether firms switching listings from the Korean growth market (KOSDAQ) to the main board (KOSPI) experienced improved trading-related market quality. We focus on market macrostructure and use a difference-in-difference technique with nearest matching. Contrary to previous research and practitioners’ opinions, we find that trading-related market quality mostly deteriorated or remained unchanged following the switch, indicating that the specific market macrostructure of a country matters. Listing switches produce a negative externality by weakening KOSDAQ and thereby impairing funding for innovative new firms, suggesting that policymakers should encourage firms whose characteristics fit the standalone growth market to remain listed there.

Published in Emerging Markets Review Volume 29, December 2016, Pages 246–273

Jong-Ho Park
Ki Beom Binh
Publication date: 
July 25, 2016
Publication type: 
2016 Working Papers