The Influence of Information Asymmetry on IPO Lock-up Provisions

Evidence from Malaysian Market

Rasidah Mohd-Rashid, Ruzita Abdul Rahim, Norliza Che-Yahya

Research output: Contribution to journalArticle

Abstract

Most of major shareholders, known as promoters of the firms, are subject to lock-up ratio for a certain period, following their company’s IPO listing. Interestingly, the lock-up ratio among firms vary, suggesting that it serves as a signalling tool to minimize potential conflicts between insiders and uninformed investors. This article investigates the influence of two main factors, that is, underwriter reputation and market capitalization on lock-up ratios. The regression results show that market capitalization, a proxy for firm size, tends to have a positive impact on lock-up ratio while the effect of underwriters’ reputation is weak. The findings also indicate that large firms with quality underwriters (proxied using the interaction of market capitalization and underwriter reputation) have lower information asymmetry and risk, and, therefore, are associated with higher lock-up ratios.

Original languageEnglish
Pages (from-to)613-626
Number of pages14
JournalGlobal Business Review
Volume20
Issue number3
DOIs
Publication statusPublished - 1 Jun 2019

Fingerprint

Asymmetry of information
Market capitalization
Underwriter reputation
Factors
Underwriters
Firm size
Large firms
Insider
Information asymmetry
Shareholders
Information risk
Investors
Interaction

Keywords

  • information asymmetry
  • Lock-up ratio
  • market capitalization
  • signalling
  • underwriter reputation

ASJC Scopus subject areas

  • Business and International Management

Cite this

The Influence of Information Asymmetry on IPO Lock-up Provisions : Evidence from Malaysian Market. / Mohd-Rashid, Rasidah; Abdul Rahim, Ruzita; Che-Yahya, Norliza.

In: Global Business Review, Vol. 20, No. 3, 01.06.2019, p. 613-626.

Research output: Contribution to journalArticle

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