| What is a Desirable IPO Lock-Up Period? Implications from the Empirical Study on the Historical Transition of the Lock-Up Period |
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Byeong Mon Cho, Sang Bin Lee |
| 의무보호예수제도 변천에 따른 실증분석과 이에 근거한 합리적인 방안 도출 |
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조병문, 이상빈 |
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| Abstract |
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The IPO lock-up period has been introduced to resolve the information asymmetry between the minor and major shareholders and subsequently prevent the moral hazard on the part of the major shareholders. The IPO lock-up period has been changed several times in Korea to reflect the then stock market circumstances. We can classify these changes into five periods based on how the lock-up period has changed. The purpose of this paper is to empirically test whether the various lock-up periods are effective in terms of the abnormal returns and the abnormal turnover ratios. We could judge that if the abnormal returns and turnover ratios are fluctuating around zero, then the stock market would not be affected at the end of the lock-up period, which means that we do not have any side effects from the information asymmetry or the moral hazard. To supplement the basic empirical results, we have investigated whether the market reactions are different depending on the industry classification, the ownership ratio of the major shareholders, and the market stabilization measures including the put-back option. Furthermore, we have examined whether the voluntary extension of the lock-up period on the part of the major shareholders would affect the market reactions. Based on the empirical results, we have proposed that the desirable direction of the lock-up period is to leave the decision of the lock-up period to the IPO firms themselves rather than apply the same lock-up period by law indifferently to all the IPO firms. The rationale behind our suggestion is that we do not observe any abnormal reactions at the end of the lock-up period. The Korean stock market is fully efficient or robust to absorb any impacts resulting from the IPO. If the market is not resilient, it is necessary to implement regulations to remedy the market failure. However, we should respect the power of the market, which is correcting market misbehavior. |
| Key Words:
대주주 소유비율,벤처금융,시장조성제도,의무보호예수,풋백옵션,Lock-Up Period,Market Stabilization Measures,Ownership Ratio of the Major Shareholders,Put-Back Option,Venture Capital |
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