The tightening of delisting criteria by financial authorities is exacerbating the information drought for small-cap stocks on the KOSDAQ. Major securities firms are avoiding the publication of analysis reports on small caps due to risk management concerns, creating a significant information gap. In this context, the independent research market is rapidly expanding.
As of late October 2026, coverage of small-cap stocks by major securities firms has effectively been limited to companies with a market capitalization of over 100 billion won. With financial authorities strictly applying delisting criteria to companies with a market capitalization below 30 billion won, there is a prevailing atmosphere of excluding analysis of small caps, which are characterized by low liquidity and high volatility.
Not only securities firms but also the Korea Exchange, Korea Securities Finance Corporation, and Korea Securities Depository, which established the Korea IR Council, are hesitant to cover reports on companies with a market capitalization below 30 billion won. An investor relations official from a listed company noted, "To avoid delisting risks and enhance corporate value, communication with investors is more crucial than ever, but there are virtually no channels to request report publications."
As small listed companies find themselves in an information and analysis blind spot, independent research firms are stepping in to fill the gap. Currently, there are 17 independent research firms registered as providers on financial information data platforms like WiseReport (excluding public institutions like the Korea IR Council), an increase of six from 11 a year ago.
Unlike traditional securities firms, independent research firms primarily rely on a sponsored research model, where they receive fees from companies to produce analysis reports. For companies, this provides a more credible report compared to their own press releases, while independent research firms secure analysis fees. Sponsored research has already become an established model in major advanced financial markets such as the U.S., Europe, and Japan.
Amid the rising trend of independent research, there are calls for regulatory adjustments. Concerns about fairness and potential violations of capital market laws arise from the fact that reports are written for a fee, yet there are no clear guidelines, leading to a perception of being in the "shadows."
An industry insider stated, "Independent research can serve as a valuable alternative to address the information imbalance in the small-cap market, which has been neglected by securities firms due to profitability and risk management issues. Rather than imposing blanket restrictions, it is essential to establish clear disclosure standards and independence guidelines to foster a healthy information ecosystem for small caps."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.