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

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

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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.
Original languageEnglish
Place of PublicationTilburg
Number of pages50
Publication statusPublished - 2005

Publication series

NameCentER Discussion Paper


  • shareholders
  • venture capital
  • lock-in agreements
  • lock-up contracts
  • lock-in expiry
  • lock-up expiry
  • signaling
  • underwriter reputation
  • underpricing


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