Unlock Day Expiration and Mandatory IPOs Lock up Among ACE Firms in Malaysia

Syamsyul Samsudin, Nik Nur Shafika Mustafa, Nor Haliza Hamzah and Che Khalilah Mahmood

International Journal of Financial Research, 2020, vol. 11, issue 3, 131-138

Abstract: This research studied the role of lockup in assessing price and volume of IPOs during the expiration of lockup in Malaysian market. The reaction of price is measured by the abnormal return while the reaction of volume is measured by the abnormal volume. The companies were selected from the years 2010 to 2018 and only companies that were still listed in Bursa Malaysia were chosen. The time frame of the study was 30 days before and 30 days after the expiration date of lock up provision. The results may show for these circumstances of i) the volume will remain and the price will decrease; ii) volume will be decreased and price will be decreased too and iii) promoters retain percentage of shares during expiration date. For situation number i), it might show the sign of a quite good quality of performance of IPOs in stock market. Evidently, the second circumstance shows decrease in price and volume of IPOs after expiration date. The scenario actually leads by demand and supply of stock. Another important evidence which supports the insignificant result is promoters retain percentage of shares during expiration date. The amounts that should be released by the companies are not offered to the market during that time. By looking at the Signaling Theory, insiders of IPOs firms who are previously restricted from selling their holdings have the first chance to sell large propositions of their shares. Investors will know the dates of IPO lockup expiration and numbers of shares by looking at the prospectus. Due to the scenario, the price and volume of IPOs will be reacting during expiration date based on this theory. It is hoped that this study will help investors or any Malaysian market participation especially in the IPOs market to notice the situation in Malaysian market regarding the lock up provision.

Keywords: initial public offering; lock up provision; moratorium; underprice; volume (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciedu.ca/journal/index.php/ijfr/article/view/18246/11203 (application/pdf)
http://www.sciedu.ca/journal/index.php/ijfr/article/view/18246 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:jfr:ijfr11:v:11:y:2020:i:3:p:131-138

DOI: 10.5430/ijfr.v11n3p131

Access Statistics for this article

International Journal of Financial Research is currently edited by Gina Perry

More articles in International Journal of Financial Research from International Journal of Financial Research, Sciedu Press
Bibliographic data for series maintained by Gina Perry ().