I examine the importance of opportunity cost of underpricing to agents in explaining underpricing at the Kosdaq market. I present a simple model and identify parameters that can affect underwriter‘s or issuer‘s opportunity cost of underpricing. In the model same parameters can be related to both underwriter‘s and issuer‘s opportunity cost, which prevent easy empirical identification of the relations in a homogeneous environment. Making use of the regulatory change in August 2003 that took differential impacts on underwirtier‘s and issuer‘s opportunity cost of underpricing, I formulate four testable hypotheses and find the empirical results supportive of the hypotheses. The results suggest that to fully explain underpricing, it is crucial to take into account non-informational environment including regulations that systematically influence agents‘ incentives to control or generate underpricing.