THE EXPIRATION OF MANDATORY AND VOLUNTARY IPO LOCK-UP PROVISIONS – EMPIRICAL EVIDENCE FROM GERMANY’S NEUER MARKT

Eric Nowak

A chapter in The Rise and Fall of Europe's New Stock Markets, 2004, pp 181-200 from Emerald Group Publishing Limited

Abstract: This chapter explores the stock price impact of expirations of lock-up provisions that prevent insiders from selling their shares after the Initial Public Offering (IPO). We examine 172 lock-up expirations of 142 IPOs floated on Germany’s Neuer Markt. We detect significant negative abnormal returns and a 25% increase in trading volume surrounding lock-up expiration. The negative abnormal returns are larger for firms with high volatility; superior performance after the IPO, low free float, and venture capital financed firms. The negative price reaction is significantly stronger for the expiration of voluntary lock-up agreements than for mandatory prohibitions of disposal.

Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:eme:afeczz:s1569-3732(04)10008-x

DOI: 10.1016/S1569-3732(04)10008-X

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