Listing is a process where a company publicly offers its shares on a stock exchange, allowing general investors to trade them. It serves as a crucial gateway for a company’s growth in the capital market and provides a standard for investors to select reliable companies.
The term “listing” originates from a word meaning “to ascend to the market,” referring to the process where a company offers its shares to the market for investors to buy and sell. This is not merely about allowing trade; it also involves the company undergoing verification in the public capital market. By securing capital and establishing growth engines, the process also enhances transparency and credibility through external oversight.
For instance, consider a venture company striving for rapid growth by pursuing listing. The company undergoes scrutiny by the Financial Supervisory Service and the exchange to verify its accounting transparency, managerial stability, and growth potential. Post-listing, the company must regularly disclose its financial status and major management activities through public announcements, which is key for investor protection and market trust formation.
From a company’s perspective, listing significantly enhances capital procurement efficiency. Compared to bank loans or bond issuances, companies can secure large-scale funds at relatively lower costs. Additionally, through the stock price formed in the market, the company can assess its value and pursue strategic decisions like mergers and acquisitions or overseas expansion based on this valuation. However, post-listing challenges include management pressure from stock price fluctuations, the burden of disclosure obligations, and the dispersal of management control.
For investors, listing serves as a criterion for selecting trustworthy investment destinations. Companies that have undergone the listing examination are considered to have a certain level of financial soundness and growth potential. Moreover, listed stocks are more liquid than unlisted ones, allowing investors to easily sell them for cash when needed. However, if a company’s performance post-listing fails to meet expectations, it could lead to significant losses due to stock price drops, necessitating caution.
Notable examples include the KOSPI and KOSDAQ markets. The KOSPI primarily targets large, stable companies, while the KOSDAQ focuses on small and venture businesses. Companies choose the market suitable for their growth stage and characteristics to proceed with listing. Recently, various methods like reverse listings through Special Purpose Acquisition Companies (SPACs) or direct overseas listings are also being utilized.
Listing presents both opportunities and risks for companies and investors alike. For companies, it provides a platform to secure capital and establish trust, but also subjects them to more extensive market scrutiny. Investors gain broader investment opportunities through listings but also bear the risks associated with market volatility. Ultimately, listing is the starting point where companies and investors meet within the capital market.
