IPO lockup expiration in the Middle East and North Africa
We examine stock market reaction to IPO lockup expiration for a sample of 60 companies in the Middle East and North Africa (MENA) region. Lockups in the MENA are set by regulators as opposed to being negotiated between firms and their underwriters, and are typically longer but vary less than those in the United States. The MENA therefore provides a unique environment in which to study the relationship between lockup length, firm ownership, and market reaction. We find that prices decline on unlock day much the same as they do in the United States. Longer lockups are associated with smaller declines, and this association is driven by non-family owned firms. We also find that family firms subject to longer lockups are more likely to experience bigger declines (or smaller increases) in trading volume than family firms under short lockup, but no such an association exists for non-family firms. Lockup length is negatively related to firm size and positively related to the fraction of IPO shares on offer that are primary, which is consistent with regulators setting shorter lockups for well-established firms and those signaling an ongoing commitment to the business. And while evidence of general IPO underpricing is inconclusive for the MENA, family firms that face short lockups are significantly more likely to enjoy higher returns on their first day of trading than family firms that face long lockups.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 22 (2012)
Issue (Month): 5 ()
|Contact details of provider:|| Web page: http://www.elsevier.com/locate/mulfin|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Black, Bernard S. & Gilson, Ronald J., 1998. "Venture capital and the structure of capital markets: banks versus stock markets," Journal of Financial Economics, Elsevier, vol. 47(3), pages 243-277, March.
- Laura Casares Field, 2001. "The Expiration of IPO Share Lockups," Journal of Finance, American Finance Association, vol. 56(2), pages 471-500, 04.
- Brau, James C. & Lambson, Val E. & McQueen, Grant, 2005. "Lockups Revisited," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 40(03), pages 519-530, September.
- Villalonga, Belen & Amit, Raphael, 2006. "How do family ownership, control and management affect firm value?," Journal of Financial Economics, Elsevier, vol. 80(2), pages 385-417, May.
- Luigi Zingales, 1995. "Insider Ownership and the Decision to Go Public," Review of Economic Studies, Oxford University Press, vol. 62(3), pages 425-448.
- Brennan, M. J. & Franks, J., 1997.
"Underpricing, ownership and control in initial public offerings of equity securities in the UK,"
Journal of Financial Economics,
Elsevier, vol. 45(3), pages 391-413, September.
- Brennan, Michael J & Franks, Julian R, 1995. "Underpricing, Ownership and Control in Initial Public Offerings of Equity Securities in the UK," CEPR Discussion Papers 1211, C.E.P.R. Discussion Papers.
- Loughran, Tim & Ritter, Jay R. & Rydqvist, Kristian, 1995. "Initial public offerings: International insights," Pacific-Basin Finance Journal, Elsevier, vol. 3(1), pages 139-140, May.
- Loughran, Tim & Ritter, Jay R. & Rydqvist, Kristian, 1994. "Initial public offerings: International insights," Pacific-Basin Finance Journal, Elsevier, vol. 2(2-3), pages 165-199, May.
- Alon Brav & Paul A. Gompers, 2003. "The Role of Lockups in Initial Public Offerings," Review of Financial Studies, Society for Financial Studies, vol. 16(1), pages 1-29.
- Welch, Ivo, 1989. " Seasoned Offerings, Imitation Costs, and the Underpricing of Initial Public Offerings," Journal of Finance, American Finance Association, vol. 44(2), pages 421-449, June.
- Ritter, Jay R, 1984. "The "Hot Issue" Market of 1980," The Journal of Business, University of Chicago Press, vol. 57(2), pages 215-240, April.
- Habib, Michel A & Ljungqvist, Alexander P, 2001. "Underpricing and Entrepreneurial Wealth Losses in IPOs: Theory and Evidence," Review of Financial Studies, Society for Financial Studies, vol. 14(2), pages 433-458.
- Michel Habib & Alexander Ljungqvist, 1999. "Underpricing and Entrepreneurial Wealth Losses in IPOs: Theory and Evidence," OFRC Working Papers Series 1999fe03, Oxford Financial Research Centre.
- Ibbotson, Roger G., 1975. "Price performance of common stock new issues," Journal of Financial Economics, Elsevier, vol. 2(3), pages 235-272, September.
- Stoughton, Neal M. & Zechner, Josef, 1998. "IPO-mechanisms, monitoring and ownership structure," Journal of Financial Economics, Elsevier, vol. 49(1), pages 45-77, July. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:eee:mulfin:v:22:y:2012:i:5:p:252-262. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.