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The authors document that the average lockup of 365 days in the UK is higher than the US 180 days and many insiders trade within the lockup period. They find that prestigious underwriters and underwriter power (longer lockup) drive their trades. However, they sell in over-performing, large, and low institutional holding IPOs, but buy in underperforming IPOs with lower underpricing and proportion of shares locked. On the lockup expiry dates, there is significant price drop for early buy but not for early sell IPOs. They suggest that this early trading activity is pre-arranged with the underwriters to mitigate information asymmetries.
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