Returns and Volume at IPO Lockup Expiration

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School of Business | Bachelor's thesis
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Date

2024

Department

Rahoituksen laitos

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Mcode

Degree programme

Rahoitus

Language

en

Pages

18 + 2

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Abstract

I examine 1914 share lockup agreements from IPOs between 2004 and 2023 in the US. The lockup agreement prohibits insiders from selling their shares for the length of the lockup and it usually lasts 180 days after the trading has started on the exchange. I find that there is statistically significant -0.7 percent abnormal return over the three-day event period. Average trading volume peaks at 90 percent above the long-term average on day 1. The expiration causes permanent around 40 percent increase in average trading volume post-expiration.

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Thesis advisor

Keloharju, Matti

Keywords

IPO, lockup expiration, abnormal volume, abnormal returns

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https://urn.fi/URN:NBN:fi:aalto-202405193415

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[kand] Kauppakorkeakoulu / BIZ