Wasim Ahmad is from the Birmingham City Business School, Birmingham City University, UK. Ranko Jelic is from the University of Birmingham, Business School – Department of Finance, UK. The authors would like to thank an anonymous referee, Martin Walker (Editor), participants at the 2012 European Financial Management Association Doctoral Colloquium in Barcelona and Research Seminars at the University of Birmingham Business School for helpful comments and suggestions.
Lockup Agreements and Survival of UK IPOs
Version of Record online: 24 APR 2014
© 2014 The Authors Journal of Business Finance & Accounting published by John Wiley & Sons Ltd.
This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License, which permits use and distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or adaptations are made.
Journal of Business Finance & Accounting
Volume 41, Issue 5-6, pages 717–742, June/July 2014
How to Cite
Ahmad, W. and Jelic, R. (2014), Lockup Agreements and Survival of UK IPOs. Journal of Business Finance & Accounting, 41: 717–742. doi: 10.1111/jbfa.12068
- Issue online: 15 JUL 2014
- Version of Record online: 24 APR 2014
- Manuscript Accepted: DEC 2013
- Manuscript Received: FEB 2013
- going private;
- private equity
This paper examines the role of lockup agreements on the survival of 580 UK Initial Public Offerings (IPOs) during the period of 1990–2011. Our accelerated failure time (AFT) survival model shows a statistically and economically significant effect of lockup length on the post-IPO survival. A 12 month increase in median lockup period increases the (median) survival time by 27%. Furthermore, the failure rates for IPOs with longer lockups are consistently lower than the failure rates for IPOs with shorter lockups regardless of delisting reasons. The results are robust to choice of different survival estimation models, heterogeneity, clustering, and alternative specification of variables. Our results highlight the importance of lockup characteristics on the subsequent survival of newly listed firms and inform recent debate regarding alleged short-termism in the UK equity market.