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Shareholder Lock-In Contracts : Share Price and Trading Volume Effects at the Lock-In Expiry

Author

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  • Angenandt, P.P.
  • Goergen, M.
  • Renneboog, L.D.R.

    (Tilburg University, Center For Economic Research)

Abstract

This paper unveils the diversity in lock-in agreements of firms listed on the Nouveau Marche stock exchange in France.We give the main economic reasons why shareholders adopt lock-in agreements that are more stringent than legally required.We relate the abnormal returns and the abnormal volume at the expiry dates of the different types of lock-in contracts to the degree of underpricing, venture-capitalist reputation and underwriter reputation.Abnormal returns and trading volume increase at the lock-in expiry; this is especially pronounced at the expiry dates of insider lock-in contracts as insiders are legally required to be locked-in.We do not find significant abnormal returns at the expiries of VC contracts, even though trading volume increases at their lock-in expiry.There is also no evidence of a positive (negative) relation between abnormal returns (abnormal volume) and more stringent lock-in contracts.Lock-in contracts and the degree of underpricing are complementary signalling devices.
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Suggested Citation

  • Angenandt, P.P. & Goergen, M. & Renneboog, L.D.R., 2005. "Shareholder Lock-In Contracts : Share Price and Trading Volume Effects at the Lock-In Expiry," Discussion Paper 2005-115, Tilburg University, Center for Economic Research.
    • Handle: RePEc:tiu:tiucen:2ab886e5-43c3-4bed-98fe-33d5c88f7afd
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    Cited by:

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    More about this item

    Keywords

    shareholders; venture capital; lock-in agreements; lock-up contracts; lock-in expiry; lock-up expiry; signaling; underwriter reputation; underpricing;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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