Does the removal of the IPO lockup matter in IPO pricing?

Using a regulatory change on the IPO lockup for institutional investors and a unique disclosure of institutional investor bidding information in China, we examine the impact of IPO lockup removal on IPO pricing. We document that the IPO lockup removal increases institutional investor bid price. The effect is stronger for sub-samples with less reputable underwriter and IPOs with high value uncertainty. The impact is channeled to a higher IPO offer price and a lower first day return. These results suggest that IPO lockup removal (IPO lockup) increases (decreases) IPO share valuation.