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IPO lockups, long run returns, and growth opportunities

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  • Haman, Janto
  • Chalmers, Keryn
  • Fang, Victor

Abstract

Evidence suggests that IPO firms have negative returns and declining growth opportunities in the years post listing. We explore whether lockup type influences such returns and growth opportunities. Specifically, we investigate long run returns and growth opportunities of mandatory and non-mandatory lockup firms. We find that long run returns (growth opportunities) for mandatory lockup firms are significantly lower (higher) than for non-mandatory lockup firms. Examining the influence of corporate governance on these associations, we find that good corporate governance is positively associated with long run returns for both lockup type firms, with the differential effect insignificant. We also find that the listing survival rate of mandatory lockup firms is higher than for non-mandatory lockup firms. Further analysis reveals that the incremental effect of smaller firm size on higher growth opportunities is stronger for mandatory lockup firms relative to non-mandatory lockup firms.

Suggested Citation

  • Haman, Janto & Chalmers, Keryn & Fang, Victor, 2017. "IPO lockups, long run returns, and growth opportunities," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 49(C), pages 184-199.
    • Handle: RePEc:eee:intfin:v:49:y:2017:i:c:p:184-199
    DOI: 10.1016/j.intfin.2017.05.002
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    Cited by:

    1. Chan, Kam C. & Li, Guangzi, 2022. "Prior banking relationships and long-term IPO performance," International Review of Economics & Finance, Elsevier, vol. 77(C), pages 123-134.
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    3. Lokman Tutuncu, 2020. "Lock-up provisions and valuation of Turkish IPOs," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 10(4), pages 587-608, December.
    4. Sahil Narang & Rudra P. Pradhan, 2021. "IPO lock-up: a review and assessment," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 48(3), pages 343-369, September.

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    More about this item

    Keywords

    IPO; Lockups; Long run returns; Growth opportunities; And corporate governance;
    All these keywords.

    JEL classification:

    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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