Investor's Attentiveness, Price Impact and Regulatory Change at Lockup Expiry

• Main Authors: Mohamed Arshad, Shamsul Bahrain, Taufil Mohd, Kamarun Nisham, Ahmad Zaluki, Nurwati Ashikkin
• Format: Article
• Language: English
• Published: Serials Publications Pvt. Ltd. 2017
• Subjects: HC Economic History and Conditions
• Online Access: http://repo.uum.edu.my/24250/1/IJER%2014%2816%29%202017%20225-234.pdf; http://repo.uum.edu.my/24250/; http://serialsjournals.com/serialjournalmanager/pdf/1512537799.pdf
• Institution: Universiti Utara Malaysia

This paper explores the attentiveness of retail investors, and examines share price impact and change in regulation at the expiration of lockup period. Quantitative research method using both primary and secondary data is employed, respectively. The explorative study is derived from a self-administered survey questionnaire using 157 respondents who are clients of the stock broking companies in Malaysia. The survey is conducted in the northern states of Malaysia based on purposive sampling technique. Results show that more than seventy percent of the respondents neither use prospectus as a guide in understanding share lockup and its provisions nor paying close attention to IPO lockup expiration dates when investing in IPOs. Hence, the findings suggest that retail investors are not attentive to IPO lockup in terms of its provisions and expirations. In addition, 292 IPO firms for the period 2003-2012 involving two lockup regimes is examined. Using the market model and market adjusted return model of event study method, the results show the existence of a significant negative abnormal return at the expiration of the lockup period. Therefore, the study provides contradicting evidence of the semi-strong from of efficient market hypothesis. On the other hand, lockup regulatory changes do not have an impact in reducing the negative abnormal returns at its expiration period.