Lockup Expirations in Brazilian IPOs

Abstract: In this study, we conducted an event study of 100 Brazilian IPO’s from 2004 to 2010 to detect if there was any significant abnormal returns after the expiration of the IPO lockup period, during which pre-IPO shareholders are prevented from selling their shares. We found no significant abnormal returns for all companies during all event dates examined, though we did detect significant negative abnormal returns around lockup for high- volatility firms. We also find that after the lockup expiration, there is a higher frequency of days with a higher-than-average trading volume.