Book chapter

The expiration of mandatory and voluntary IPO Lock-up provisions : empirical evidence from Germany’s Neuer Markt

  • Nowak, Eric Istituto di finanza (IFin), Facoltà di scienze economiche, Università della Svizzera italiana, Svizzera
Published in:
  • Advances in Financial Economics / Hirschey, Mark ; John, Kose ; Makhija, Anil K.. - 2004, vol. 10, p. 181- 200
English 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.
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