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.
|Place of Publication||Tilburg|
|Number of pages||50|
|Publication status||Published - 2005|
|Name||CentER Discussion Paper|
- venture capital
- lock-in agreements
- lock-up contracts
- lock-in expiry
- lock-up expiry
- underwriter reputation
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. (CentER Discussion Paper; Vol. 2005-115). Finance.