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.
Nowak, E. (2004), "THE EXPIRATION OF MANDATORY AND VOLUNTARY IPO LOCK-UP PROVISIONS – EMPIRICAL EVIDENCE FROM GERMANY’S NEUER MARKT", Giudici, G. and Roosenboom, P. (Ed.) The Rise and Fall of Europe's New Stock Markets (Advances in Financial Economics, Vol. 10), Emerald Group Publishing Limited, Bingley, pp. 181-200. https://doi.org/10.1016/S1569-3732(04)10008-X
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