The 180-day lock-up period and insiders’ equity selling
- Cite this article as:
- Ayayi, A. J Econ Finan (2005) 29: 32. doi:10.1007/BF02761541
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This article examines how insiders who provide capital and advisory services determine the proportion of common stock to be sold during an IPO and shows that, after the IPO, a high-value investee's insiders continue to hold a significant fraction of its equity stake relative to a low-value investee's insiders. The result is consistent with the signaling of the insider trader reputation, the lock-up argument, and the only least-cost separating equilibrium that survives the intuitive criterion.