Abnormal Initial Public Offering (IPO) Price Performance and the Lockup Expiration: Parametric and Nonparametric Tests of Abnormal Performance Occurring at the Expiration of the Lockup Period from 1985 to 2002

Abstract

This project's goal was to evaluate whether abnormally negative performance occurred in the 5-day period surrounding the expiration in the lockup period. This research project used a sample of 5,559 IPOs that went public from 1985 to 2002 to determine the extent of abnormal performance occurring during the expiration of the lockup period. Using (a) standard t tests and (b) nonparametric Wilcoxon Signed Rank Tests of abnormal performance, this analysis provides evidence that IPOs do experience a significantly negative performance event during the expiration of their lockup period.