Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
1019581 | Journal of Business Venturing | 2009 | 13 Pages |
Abstract
To reduce information asymmetries for potential investors considering investment in an IPO venture, owners can signal the firm's longer-term viability and quality in several ways. The lockup period, is one signal that can be offered. We investigated the lockup period of a sample of 640 ventures going through the IPO and find that a longer lockup period acts as a substitute signal to venture capital (VC) and prestigious underwriter backing. Furthermore, we find that ventures which have a going concern issue can reduce the amount of underpricing at the time of the IPO by accepting a longer lockup period.
Keywords
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Business, Management and Accounting
Business and International Management
Authors
Jonathan D. Arthurs, Lowell W. Busenitz, Robert E. Hoskisson, Richard A. Johnson,