Abstract
A lock-up agreement is an arrangement between the underwriter and certain pre-IPO shareholders. This paper examines the influence of an underwriter’s early lock-up release on shareholder wealth. The study found significant negative abnormal returns associated with the early lock-up release annoucement. Negative abnormal returns are more pronounced for venture capital backed firms than for firms not venture capital backed. In addition, scheduled lock-up release day abnormal returns, found in previous studies to be significantly negative, are reduced for firms announcing the early lock-up release.(JEL G24, G30)
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Keasler, T.R. The underwriter’s early lock-up release: Empirical evidence. J Econ Finan 25, 214–228 (2001). https://doi.org/10.1007/BF02744524
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DOI: https://doi.org/10.1007/BF02744524