Lockup Clauses in Italian IPOs

33 Pages Posted: 15 Aug 2011

See all articles by Dmitri Boreiko

Dmitri Boreiko

Free University of Bozen-Bolzano - School of Economics

Stefano Lombardo

European Corporate Governance Institute (ECGI); Free University of Bozen-Bolzano - CRELE Center for Research in Law and Economics; Free University of Bozen-Bolzano - Faculty of Economics and Management

Date Written: August 1, 2011

Abstract

Virtually all IPO prospectuses feature lockup provisions that limit pre-IPO shareholders’ share sales for some period of time after negotiations start. The aim of the paper is to analyze in-depth voluntary lockups in the Italian setting and to draw conclusions about their effect both on different shareholder classes and on share prices. We show that the lockups are considerably longer and heterogeneous than US or European evidence shows, and their duration and size serves primarily as a commitment device to alleviate the moral hazard problem faced by the incumbent shareholders. We show that abnormal returns around the lockup expiration dates are associated solely with venture-capital backed IPOs.

Keywords: Law and finance, IPOs, lockup clauses, regulation of financial markets

JEL Classification: G24, G32, G38, K12, K22

Suggested Citation

Boreiko, Dmitri and Lombardo, Stefano, Lockup Clauses in Italian IPOs (August 1, 2011). ECGI - Finance Working Paper No. 314/2011, Available at SSRN: https://ssrn.com/abstract=1909270 or http://dx.doi.org/10.2139/ssrn.1909270

Dmitri Boreiko (Contact Author)

Free University of Bozen-Bolzano - School of Economics ( email )

Sernesiplatz 1
Bozen-Bolzano, BZ 39100
Italy

Stefano Lombardo

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Free University of Bozen-Bolzano - CRELE Center for Research in Law and Economics ( email )

Free University of Bolzano
Piazza Universita
Bolzano, BZ 39100
Italy

Free University of Bozen-Bolzano - Faculty of Economics and Management

Piazza Universita
Bolzano-Bozen (BZ), 39100
Italy
+39 0471 013491 (Phone)

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