Explaining the Diversity in Shareholder Lockup Agreements

38 Pages Posted: 25 Jul 2004  

Marc Goergen

Cardiff University - Cardiff Business School; European Corporate Governance Institute (ECGI)

Arif Khurshed

University of Manchester - Manchester Business School, Division of Accounting Finance

Luc Renneboog

Tilburg University - Department of Finance; European Corporate Governance Institute (ECGI); Tilburg Law and Economics Center (TILEC)

Abstract

This paper investigates whether shareholder lockup agreements in France and Germany mitigate problems of agency and asymmetric information. Despite minimum requirements in terms of the length and percentage of shares locked up, lockup agreements are not only highly diverse across firms but also across the different shareholders of a single firm as most firms have different agreements in place for executives, non-executives and venture capitalists. The diversity across firms and types of shareholders can be explained by firm characteristics - such as the level of uncertainty - as well as the type and importance of each shareholder within the firm.

Keywords: Initial public offerings, lockup agreements, underpricing, asymmetric informa-tion, agency costs, valuation

JEL Classification: G24, G34

Suggested Citation

Goergen, Marc and Khurshed, Arif and Renneboog, Luc, Explaining the Diversity in Shareholder Lockup Agreements. Journal of Financial Intermediation, Vol. 15, No. 2, pp. 254-280, April 2006; ECGI - Finance Working Paper No. 48/2004; EFA 2004 Maastricht Meetings Paper No. 1469. Available at SSRN: https://ssrn.com/abstract=565941

Marc Goergen (Contact Author)

Cardiff University - Cardiff Business School ( email )

Colum Drive
Cardiff, CF10 3EU
United Kingdom

HOME PAGE: http://www.cf.ac.uk/carbs/faculty/goergenm/index.html

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Arif Khurshed

University of Manchester - Manchester Business School, Division of Accounting Finance ( email )

Crawford House
Oxford Road
Manchester, M15 6PB
United Kingdom
+44 0 161 275 4475 (Phone)
+44 0 161 275 4023 (Fax)

Luc Renneboog

Tilburg University - Department of Finance ( email )

P.O. Box 90153
Warandelaan 2
5000 LE Tilburg
Netherlands
+13 31 466 8210 (Phone)
+13 31 466 2875 (Fax)

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Tilburg Law and Economics Center (TILEC)

Warandelaan 2
Tilburg, 5000 LE
Netherlands

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