The influence of information asymmetry on IPO lock-up provisions: Evidence from emerging markets

• Main Authors: Mohd Rashid, Rasidah, Abdul Rahim, Ruzita, Che-Yahya, Norliza
• Format: Conference or Workshop Item
• Language: English
• Published: 2015
• Subjects: HB Economic Theory
• Online Access: http://repo.uum.edu.my/16289/1/14.pdf; http://repo.uum.edu.my/16289/; http://www.aamc2015.usm.my/
• Institution: Universiti Utara Malaysia

Most of the major shareholders, known as promoters of the firms, are subjected to lock-up ratio for a certain period,following an IPO listing,Interestingly the lock-up ratios among firms vary, suggesting that it serves as a signaling tool to minimize potential conflicts between insiders and uninformed investors.This paper investigates the influence of two main factors, that is,underwriter reputation and market capitalization on lock-up ratios.Several interesting results are documented.The regression results show that market capitalization, a proxy for firm size (large firms), tend to have a higher lock-up ratio while the effects of underwriters reputation are weak.The findings, using the interaction of market capitalization and underwriter reputation,indicate that large firms with quality underwriters have lower information asymmetry and risk,and therefore are associated with bigger lock-up ratios.