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IPO lockups, long run returns, and growth opportunities

journal contribution
posted on 2017-07-01, 00:00 authored by J Haman, K Chalmers, Victor Fang
Evidence suggests that IPO firms have negative returns and declining growth opportunities in the years post listing. We explore whether lockup type influences such returns and growth opportunities. Specifically, we investigate long run returns and growth opportunities of mandatory and non-mandatory lockup firms. We find that long run returns (growth opportunities) for mandatory lockup firms are significantly lower (higher) than for non-mandatory lockup firms. Examining the influence of corporate governance on these associations, we find that good corporate governance is positively associated with long run returns for both lockup type firms, with the differential effect insignificant. We also find that the listing survival rate of mandatory lockup firms is higher than for non-mandatory lockup firms. Further analysis reveals that the incremental effect of smaller firm size on higher growth opportunities is stronger for mandatory lockup firms relative to non-mandatory lockup firms.

History

Journal

Journal of international financial markets, institutions and money

Volume

49

Pagination

184 - 199

Publisher

Elsevier

Location

Amsterdam, The Netherlands

ISSN

1042-4431

Language

eng

Publication classification

C1.1 Refereed article in a scholarly journal

Copyright notice

2017, Elsevier