Market Reaction and Insider Trading of Lock-up Expiration of Financial Companies

• Main Authors: Ching-Yuan Huang, 黃清源
• Other Authors: Chih-Jen Huang
• Format: Others
• Language: zh-TW
• Published: 2004
• Online Access: http://ndltd.ncl.edu.tw/handle/89927910789747697311

碩士 === 淡江大學 === 會計學系 === 92 === Lock-up is a rule about how the insiders have obligation to give their holding stocks to the central depository company after IPO. It is quite different in U.S where it is based on agreements. Most studies cast financial company samples aside due to their unique nature. Thus, we focus on financial companies, attempting to explore the effect of Lock-up on financial market. As the whole, the evidence shows that stock price does fall around lock-up expiration in Taiwan financial market, concurrent with positive abnormal trading volume. Divided into six lock-up expiration dates, the results imply a negative respond of stock price (except event 1 and 6) and a positive abnormal trading volume (except event 2). Moreover, they indicate that financial companies are extremely sensitive to Lock-up in trading volume. In regard to insider trading behavior before and after receiving their restricted stocks, we find insiders do not release large number of stocks after receiving. In addition, over the lock-up period there is no stable pattern concerning insider trading behavior. Finally, our evidence implies that the prior return is significantly associated with the cumulative abnormal returns around lock-up expiration. Divided into five expiration dates, the results of the variables lack of consistency among five events.