Korean Firms May Choose Listing Overseas
The controversy over the Korean financial regulator’s handling of Samsung BioLogics is growing as it was belatedly disclosed that the company was offered to be listed on a foreign stock exchange.
During an investor relations (IR) session held at Samsung BioLogics’ second plant in Songdo, Incheon, on July 1, 2015, Samsung Bioepis CEO Ko Han-sung said, “We want to go public on the NASDAQ market in the Unites States, which is the most advanced exchange in the biotech sector, and be evaluated properly without being confined to the limits of the South Korean market.”
However, Korea Exchange relaxed its listing requirement to facilitate Samsung BioLogics’ listing on the domestic exchange, braving criticism that it offered preferential treatment to the company.
As a result, Samsung BioLogics withdrew its plan to be listed on the NASDAQ market and went public on the KOSPI market in November 2016.
The Korean financial regulator is facing criticism from the business community for its “unreasonable” treatment of Samsung BioLogics after listing.
“Korea Exchange (KRX) and the financial authorities had persuaded Samsung BioLogics and Samsung Bioepis not to list on the NASDAQ market but list on the KOSPI market. But the financial authorities decided to punish the company for accounting fraud after its listing. It seems unfair to us,” a senior official of an economic organization said.
As the Samsung BioLogics incident exposed the uncertainties in accounting policy of the nation’s financial authorities, concerns that domestic companies could withdraw from the domestic stock market and go global are growing.
Lee Byung-tae, a professor in the college of business at KAIST, said, “There is a lot of competition among global stock exchanges to attract blue chip companies that have a high volume of transactions and help increase the fee income. As an investor in Samsung BioLogics, I personally think the company can get a better valuation when it goes global.”
Some also pointed out that the financial authorities cannot avoid blame for causing confusion among Korean companies over the interpretation of the International Financial Reporting Standards (IFRS), which is basically designed to expand the accounting autonomy of companies.
Yeon Gang-heum, an economics professor at Yonsei University, said, “The Securities and Futures Commission presented Samsung BioLogics’ internal documents as the ‘smoking gun’ of the company’s fabrication of its accounting books. But the documents do not prove that the company committed accounting fraud. It should be examined whether there were actually deliberate accounting fraud practices. It is not persuasive to make conclusion based on the probability alone. Since the financial authorities also had the obligation to prevent this, they cannot avoid responsibility for the incident.”