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This article examines the influence of foreign investor trading on information asymmetry in the Korean stock market, a representative emerging market characterized by a high level of information asymmetry between corporate insiders and outsiders, and among investors. We find a significantly positive relationship between foreign investor trading and the consequent bid–ask spread – the latter of which is considered as a proxy for the degree of information asymmetry – on both daily and weekly bases. Our results indicate that active foreign investor trading tends to exacerbate informational variation. [ABSTRACT FROM AUTHOR]

This study examines the impact of institutional monitoring on opportunistic seasoned equity offerings (SEOs) in the Korean stock market. With a firm’s accrual quality as a measurement for the degree of information asymmetry between managers and investors, we hypothesize that the managers of firms with poor accrual quality are likely to engage in opportunistic SEOs, but such opportunistic activity is weak in firms strongly monitored by institutional investors. The empirical findings indicate that opportunistic SEOs tend to be deterred by institutional monitoring. [ABSTRACT FROM AUTHOR]

We directly examine the trading behaviors of individual investors in a short investment horizon based on unique daily trading data from the Korean stock market. Demand by individual investors increases this week when returns increased last week, implying that individual investors are momentum traders in the short term. Further, demand by individual investors last week is positively related to their demand this week, suggesting that individual investors tend to herd. In addition, demand by individual investors last week is negatively associated with returns this week, indicating unprofitable trading behaviors. [ABSTRACT FROM AUTHOR]

This article examines the abnormal trading patterns by investor types around corporate mergers in the Korean financial market. Extending Han and Chung (2013), I investigate standardized abnormal net buy (SANB) of institutional and individual investors around both good and bad merger announcements based on unique daily trading data. I find that institutional investors abnormally buy (sell) their shares on a bidding firm before the announcement of a good (bad) merger, while individual investors abnormally sell (buy) the shares. I also find that institutional investors continue to abnormally buy (sell) their shares on a bidding firm even after the announcement of a good (bad) merger, while individual investors continue to abnormally sell (buy) the shares. Since good (bad) mergers exhibit positive (negative) cumulative abnormal returns around the announcement, the findings support the evidence of informed and/or sophisticated (uninformed and/or unsophisticated) trading by institutional (individual) investors. [ABSTRACT FROM PUBLISHER]

This paper studies the economic motivations for stock splits in the Korean stock market. Specifically, we investigate whether a stock split can be used not only as a tool to reveal information, but also as a manipulation tool, by dividing sample firms into two groups between the firms that split stocks with and without subsequent corporate events. We then examine each group's changes in short- and long-term abnormal returns and ownership around the time of the stock splits. We find that firms that split stocks both with and without subsequent corporate events show positive abnormal returns around the announcement date. However, we find evidence that long-term performance and insider ownership decline greatly after the announcement date only among the firms that split stocks and have subsequent corporate events. In particular, firms that are listed on the KOSDAQ and go through other corporate events after a stock split exhibit a strong and positive association between change in the insider ownership and long-term performance. This result implies that the decrease in insider ownership and its negative effect on long-term performance are more pronounced in firms that are listed for short periods and are more likely to experience information asymmetry. Overall, our results indicate that firms involved in other corporate events after a stock split are likely to utilize the stock split as a manipulation tool. [ABSTRACT FROM AUTHOR]