The standardization of Lockups in IPOs

• Main Authors: Ying-Wei Wu, 吳英瑋
• Other Authors: Hsuan-Chi Chen
• Format: Others
• Language: en_US
• Published: 2004
• Online Access: http://ndltd.ncl.edu.tw/handle/26423028247915254599

碩士 === 元智大學 === 財務金融研究所 === 92 === Academic researches generally consider that lockups is a commitment device to mitigate moral hazard problems, which issuing firms with the high information asymmetric should be impose the longer lockup period by underwriters. We examine the trend of standardizing lockup for a sample of 4,563 IPOs form 1988 to 2002. We consider that the standardization of lockups is a self-regulation which can affiliate the information asymmetric in IPOs. Our empirical results support the self-regulation and convention hypotheses. Prestigious investment banks set up the standardizing lockup which the accumulation of precedence will attracts more and more market participants to follow. We also find that the trend of standardizing lockup period is associated with Chen and Ritter’s (2000) finding that underwriter’s spread generally standardized at 7%.