KOR

Research Staff

Research Staff

Cho, Sung Hoon Senior Research Fellow, Head of Capital Market Analysis and Forecasting
Head of the Center, Digital Finance Research Center

Profile

Education
Ohio State University (Ph.D. in Business Administration)
Seoul National University (BA & MA in Business Administration)
Professional Experience
~ present Senior Research Fellow, KCMI
2009~2014.5 Vice President, KCMI
2008~2009 Vice President, KSRI
2001~2008 Research Fellow
1985~2000 Korea Telecom

Publications

Opinion

A Thought on Directions for the Sound SPAC Market Development / Oct. 12, 2021
As SPACs have surged in popularity in the US since the Covid-19 spread intensified in 2020, Korea is also witnessing a growing interest in SPACs. There is a widespread perception that compared with traditional IPOs, SPACs offer a less-uncertain, low-cost alternative route to companies who plan to go public, and serve as a relatively safer investment target. However, researchers who analyzed the SPAC market found that going public via a SPAC merger is more expensive than traditional IPOs and in addition, can bring about investment losses. Furthermore, the structure of SPACs may give rise to conflicts of interest between SPAC sponsors and public investors. Therefore, SPACs need to perform a transparent and sufficient corporate disclosure to facilitate the growth and development of the sound SPAC market and to minimize concerns about investor protection. In this regard, the supervisory authorities should play a role in ensuring that such disclosures are properly implemented by SPACs. At the same time, investors who intend to invest in a SPAC should interpret disclosed information based on a thorough understanding of the structure and intrinsic features of SPACs, and also recognize the possibility of suffering losses from their investment in a SPAC before making any investment decisions.
Public vs. Private Corporation, Public vs. Private Market / Apr. 07, 2021
In the US, the number of public corporations (listed firms) is on the steady decline after reaching the peak in 1996. Some often-mentioned causes for the reluctance of founders and managers to go public include concerns about the loss of control over key decision making, short-termism of public market investors, and the costs listed firms bear to remain listed. However, a more fundamental cause is said to lie in the US public market’s failure to catch up with latest changes in new firm characteristics and business models for transforming itself into a marketplace more fitted for innovative start-ups. Another factor in play is the well-developed private market in the US via which start-ups can raise capital and early-stage investors can exit their investment without tapping into the public market. Surely, a well-functioning and active private market in terms of firms’ financing, early-stage investors’ exit, and corporate governance could broaden managers’ choices of whether to go public or not. However, from the perspective of investors—especially retail ones with limited access to the private market, the fall in the number of listed firms could have an adverse impact of reducing a set of investment opportunities. It would be a key policy challenge to strike an optimal balance between private and public markets, which should be preconditioned by objective research for accumulating sufficient knowledge and evidence.
NYSE Rule Changes to Facilitate Direct Listing and Implications / Dec. 08, 2020
Direct listing is one of the paths including IPOs and SPACs via which a firm goes public and becomes a public company. It directly lists the existing shares held by the existing shareholders on a stock exchange without any primary offering. The benefits of such a path include a simple process and a less cost paid to investment banks because direct listing does away with conventional IPO procedures such as a roadshow, book building, allotment to institutional investors, etc. However, its absence of capital raising is viewed as a critical drawback. For the past few years, direct listing has garnered attention as firms such as Spotify, Slack, and Palantir chose direct listing to float their shares on the NYSE. Another important event is the SEC’s approval on the NYSE rule change that allows for primary offering and selling of those shares in direct listing. If finalized, the revised rule that enables firms to raise capital via direct listing could offer an effective alternative to IPO and broaden the choice of firms thinking about going public. Because direct listing involves no underwriter, an increase in this listing path could impose a significant impact on investment banks’ operation. Institutional investors—who used to be allotted shares by the lead manager before listing in an IPO deal—will be faced with a direct listing environment where they have to participate in an opening auction with other investors.Although there has been no case of direct listing in Korea in the 2000s, it’s important to devote ceaseless effort to improvement that is to provide more benefits to investors and firms seeking to go public, while closely keeping an eye on developments in overseas markets.
Discussions on Unicorn Valuation and Implications / Jul. 07, 2020
Some of listed unicorns have failed to generate profits for a considerable time being, and this is well reflected in their lackluster share prices. Under this context, doubts have been raised about startup valuation and a possible overvaluation in the private market. A startup could be valued differently in the private and public markets primarily due to several factors such as short-termism of public market investors, a potential overvaluation if startup valuation meets with abundant liquidity in the global venture capital market, and lack of transparency in governance and accounting. Startups too are supposed to generate profits as a profit-seeking company. In particular, a startup that once entered the public market should be able to turn around to profits and generate cash flows as fast as possible. Given that abundant liquidity in the private market likely leads to an overvaluation, cautious and cool-headed approach is needed to prevent the government’s venture nurturing policy from giving rise to fake unicorns that cannot generate actual cash flows. The current Covid-19 pandemic is expected to offer an opportunity via which overpriced unicorns in the global venture market come to the fore to get revaluated.

Seminar Presentation