IPO Lock-up expirations; An empirical study on the Nordic market during 2009-2016
(2017) BUSN79 20171Department of Business Administration
- Abstract
- Purpose: The purpose of this study is to investigate whether abnormal returns can be
observed in stock prices after the expiration of lock-up periods related to an IPO. In addition,
the purpose is to analyse if private equity/venture capital (PEVC) ownership, the use of
staggered lock-ups and the length of lock-up periods affect this return.
Methodology: This event study examines how the market reacts around the expiration of
IPO lock-up periods by using the market model. A multiple regression analysis was
conducted where the dependent variable (cumulative abnormal return) was regressed on IPO
characteristics specific variables.
Theoretical perspectives: This dissertation is testing whether the semi-strong form of the
efficient... (More) - Purpose: The purpose of this study is to investigate whether abnormal returns can be
observed in stock prices after the expiration of lock-up periods related to an IPO. In addition,
the purpose is to analyse if private equity/venture capital (PEVC) ownership, the use of
staggered lock-ups and the length of lock-up periods affect this return.
Methodology: This event study examines how the market reacts around the expiration of
IPO lock-up periods by using the market model. A multiple regression analysis was
conducted where the dependent variable (cumulative abnormal return) was regressed on IPO
characteristics specific variables.
Theoretical perspectives: This dissertation is testing whether the semi-strong form of the
efficient market hypothesis holds. In addition, theories regarding a downward sloping
demand curve, costly arbitrage opportunities, information asymmetry and signalling theory
are used to analyse the results.
Empirical foundation: The sample consists of companies completing IPOs on Nasdaq OMX
Nordic and Oslo Børs during 2009-2016, on the main market lists. Data were obtained from
the databases Zephyr, Bloomberg Terminal and DataStream.
Conclusions: The study provides new evidence for the Nordic market and concludes that
abnormal returns exist around the expiration for lock-up periods with an observed significant
abnormal return of -0.72%. The result shows evidence against the semi-strong form of the
efficient market hypothesis and could potentially support a downward sloping demand curve
and theories regarding information asymmetry between pre- and post-IPO owners and costly
arbitrage opportunities. The study did not find any statistically significant evidence
supporting that IPO characteristics in terms of PEVC-backing, staggered IPOs or the lock-up
period length affects this abnormal return. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/8922596
- author
- van Enst, Oskar LU and Forsberg, Erika LU
- supervisor
- organization
- course
- BUSN79 20171
- year
- 2017
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- IPO, Lock-up periods, abnormal returns, efficient market hypothesis, PEVCownership
- language
- English
- id
- 8922596
- date added to LUP
- 2017-09-08 13:12:45
- date last changed
- 2017-09-08 13:12:45
@misc{8922596, abstract = {{Purpose: The purpose of this study is to investigate whether abnormal returns can be observed in stock prices after the expiration of lock-up periods related to an IPO. In addition, the purpose is to analyse if private equity/venture capital (PEVC) ownership, the use of staggered lock-ups and the length of lock-up periods affect this return. Methodology: This event study examines how the market reacts around the expiration of IPO lock-up periods by using the market model. A multiple regression analysis was conducted where the dependent variable (cumulative abnormal return) was regressed on IPO characteristics specific variables. Theoretical perspectives: This dissertation is testing whether the semi-strong form of the efficient market hypothesis holds. In addition, theories regarding a downward sloping demand curve, costly arbitrage opportunities, information asymmetry and signalling theory are used to analyse the results. Empirical foundation: The sample consists of companies completing IPOs on Nasdaq OMX Nordic and Oslo Børs during 2009-2016, on the main market lists. Data were obtained from the databases Zephyr, Bloomberg Terminal and DataStream. Conclusions: The study provides new evidence for the Nordic market and concludes that abnormal returns exist around the expiration for lock-up periods with an observed significant abnormal return of -0.72%. The result shows evidence against the semi-strong form of the efficient market hypothesis and could potentially support a downward sloping demand curve and theories regarding information asymmetry between pre- and post-IPO owners and costly arbitrage opportunities. The study did not find any statistically significant evidence supporting that IPO characteristics in terms of PEVC-backing, staggered IPOs or the lock-up period length affects this abnormal return.}}, author = {{van Enst, Oskar and Forsberg, Erika}}, language = {{eng}}, note = {{Student Paper}}, title = {{IPO Lock-up expirations; An empirical study on the Nordic market during 2009-2016}}, year = {{2017}}, }