The Role of Lockups in Initial Public Offerings
In a sample of 2,794 initial public offerings (IPOs), we test three potential explanations for the existence of IPO lockups: lockups serve as (i) a signal of firm quality, (ii) a commitment device to alleviate moral hazard problems, or (iii) a mechanism for underwriters to extract additional compens...
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| Veröffentlicht in: | The Review of financial studies 2003-04, Vol.16 (1), p.1-29 |
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| container_title | The Review of financial studies |
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| creator | Brav, Alon Gompers, Paul A. |
| description | In a sample of 2,794 initial public offerings (IPOs), we test three potential explanations for the existence of IPO lockups: lockups serve as (i) a signal of firm quality, (ii) a commitment device to alleviate moral hazard problems, or (iii) a mechanism for underwriters to extract additional compensation from the issuing firm. Our results support the commitment hypothesis. Insiders of firms that are associated with greater potential for moral hazard lockup their shares for a longer period of time. Insiders of firms that have experienced larger excess returns, are backed by venture capitalists, or go public with high-quality underwriters are more likely to be released from the lockup restrictions. |
| doi_str_mv | 10.1093/rfs/16.1.0001 |
| format | Article |
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Our results support the commitment hypothesis. Insiders of firms that are associated with greater potential for moral hazard lockup their shares for a longer period of time. 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| fulltext | fulltext |
| identifier | ISSN: 0893-9454 |
| ispartof | The Review of financial studies, 2003-04, Vol.16 (1), p.1-29 |
| issn | 0893-9454 1465-7368 |
| language | eng |
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| source | Jstor Complete Legacy; Oxford University Press Journals All Titles (1996-Current); Business Source Complete |
| subjects | Asking prices Business structures Economics Enterprises Equity Finance Firm theory Initial public offering Initial public offerings Investment banking Investors Moral hazard Seasoned equity offerings Shares outstanding Stock shares Venture capital |
| title | The Role of Lockups in Initial Public Offerings |
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