The Role of Lockups in Initial Public Offerings
Publication
, Journal Article
Brav, A; Gompers, PA
Published in: Review of Financial Studies
January 1, 2003
In a sample of 2,794 initial public offerings (IPOs), we test three potential explanations for the existence of IPO lockups: lockups serve as (i) a signal of firm quality, (ii) a commitment device to alleviate moral hazard problems, or (iii) a mechanism for under-writers to extract additional compensation from the issuing firm. Our results support the commitment hypothesis. Insiders of firms that are associated with greater potential for moral hazard lockup their shares for a longer period of time. Insiders of firms that have experienced larger excess returns, are backed by venture capitalists, or go public with high-quality underwriters are more likely to be released from the lockup restrictions.
Duke Scholars
Published In
Review of Financial Studies
DOI
ISSN
0893-9454
Publication Date
January 1, 2003
Volume
16
Issue
1
Start / End Page
1 / 29
Related Subject Headings
- Finance
- 3801 Applied economics
- 3502 Banking, finance and investment
- 1502 Banking, Finance and Investment
- 1402 Applied Economics
- 1401 Economic Theory
Citation
APA
Chicago
ICMJE
MLA
NLM
Brav, A., & Gompers, P. A. (2003). The Role of Lockups in Initial Public Offerings. Review of Financial Studies, 16(1), 1–29. https://doi.org/10.1093/rfs/16.1.0001
Brav, A., and P. A. Gompers. “The Role of Lockups in Initial Public Offerings.” Review of Financial Studies 16, no. 1 (January 1, 2003): 1–29. https://doi.org/10.1093/rfs/16.1.0001.
Brav A, Gompers PA. The Role of Lockups in Initial Public Offerings. Review of Financial Studies. 2003 Jan 1;16(1):1–29.
Brav, A., and P. A. Gompers. “The Role of Lockups in Initial Public Offerings.” Review of Financial Studies, vol. 16, no. 1, Jan. 2003, pp. 1–29. Scopus, doi:10.1093/rfs/16.1.0001.
Brav A, Gompers PA. The Role of Lockups in Initial Public Offerings. Review of Financial Studies. 2003 Jan 1;16(1):1–29.
Published In
Review of Financial Studies
DOI
ISSN
0893-9454
Publication Date
January 1, 2003
Volume
16
Issue
1
Start / End Page
1 / 29
Related Subject Headings
- Finance
- 3801 Applied economics
- 3502 Banking, finance and investment
- 1502 Banking, Finance and Investment
- 1402 Applied Economics
- 1401 Economic Theory