This paper analyses the expiration of IPO-lockup periods and its affects on stock returns using event study methodology. The study focuses on 5,171 IPOs with lockup agreements in the U.S. market between 1988 and 2018. Significant differences in cumulative abnormal returns due to various firm characteristics are explored.
This thesis is largely based on the paper of Field and Hanka (2001) and assesses whether the expiration of lockup periods results in abnormal returns and daily trading volume. For this purpose, an event study for 3,306 lockup agreements of IPOs over a 31-year period from 1988 until 2018 is performed. The sample is limited to the United States as the newly listed firms' domicile nation. The changes in daily trading volume around the expiration date of the lockup are also analysed. Moreover, the paper examines the length of the agreed lockup periods and whether tech firms react differently to the expiration from firms in other industries.
Outline
List of Abbreviations
List of Tables and Illustrations
1. Introduction
2. Data and Methodology
2.1. TheSample
2.2. Event Study Methodology
3. Results
3.1. Length of the Lockup Period
3.2. Abnormal Returns Around the Unlock Date Across All Firms
3.3. Venture Capital Backing
3.4. Techvs.Non-TechFirms
3.5. Development of Cumulative Abnormal Returns Over Time
3.6. Development ofDaily Volume During the Event Window
3.7. Development ofBid-Ask Spreads During the Event Window
3.8. Firms with Multiple Lockup Days
3.9. Robustness Check - 180-Days Effect
4. Conclusion
Appendices
Bibliography
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