In this article, I wanted to show the effective investment strategy for initial public offerings from the standpoint of dominant investors such as funds and pensions. In the world of IPO market, it is common that the issuing price is systematically under-priced world-widel. This phenomenon is supported by lots of empirical studies. Under these circumstances, Dominant investors (such as funds and pensions) must makemore rational investment decisions. In order to offer insights to them, I studied relationships between early abnormal returns and uncertainty factors. The main results as follows:
First, In KOSDAQ IPO market, the phenomenon of under-pricing is observed.
Second, the cause of the early abnormal returns was mainly the uncertainty in advance, There was a noticed negative relation between the abnormal returns and firm's asset size, offering size, offering price and price earnings ratio.
Finally, the possibility of negative excess returns is affected by offering size, PER, offering price intrinsic value ratio and wishing price intrinsic value ratio.
