The Key to a Safe IPO

Sammanfattning

Purpose: The purpose of the study is to examine the implications of a lock-up agreement for the first day return and long-term performance on the Nordic markets, during the years of 2010-2021. The study aims to contribute new insights to investors and stakeholders about lock-up agreements' implication and role in initial public offerings. Methodology: The authors of this study have chosen to use a quantitative method and a deductive approach as methodology for this study. Theoretical perspectives: The study is conducted on the basis of previous research regarding lock-up agreements, long-term performance and initial public offerings. This is combined with theories of efficient markets, information asymmetry and the agent-principal problem. Empirical foundation: The empirical data consists of information from 326 initial public offerings. Information and firm prospectus has been gathered through FactSet and the firm's websites. Conclusions: Findings conclude that lock-up agreements and its length have no significant effect on the initial return and long-run performance of IPOs in the Nordic region. Rather it is suggested that the characteristics of the Nordic market in terms of shareholder protection and high level of corporate governance undermines any potential impact of a lock-up agreement. Thus, it can not be used as an indication for the success of an IPO in terms of an investor's perspective.