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The effect of lockup on management earnings forecasts disclosure in French IPOs

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This study investigates the effect of lockup agreements on management earnings forecasts in initial public offering (IPO) prospectuses. Using a sample of 312 French firms that went public over the period 1997–2016, we find that IPOs with lockup agreements are more likely to disclose conservative earnings forecasts. In particular, we provide evidence that IPOs with more locked-up shares and those selecting longer lockup periods, have more accurate management earnings forecasts. In other words, managers of firms with a higher proportion of shares locked up and longer lockup agreements experience greater costs of non-diversification of idiosyncratic risk. They tend, thus, to provide more conservative and accurate forecasts to prevent costs arising from earnings forecast error. These results are robust to a number of sensitivity tests.
Original languageEnglish
Number of pages23
JournalJournal of Management and Governance
Early online date5 Jul 2019
DOIs
Publication statusEarly online - 5 Jul 2019

Documents

  • ALLAYA_2019_cright-student_JMG_The Effect of Lockup on Management Earnings Forecasts Disclosure in French IPOs

    Rights statement: This is a post-peer-review, pre-copyedit version of an article published in Journal of Management and Governance. The final authenticated version is available online at Springer via http://dx.doi.org/10.1007/s10997-019-09477-x.

    Accepted author manuscript (Post-print), 446 KB, PDF document

    Due to publisher’s copyright restrictions, this document is not freely available to download from this website until: 5/07/20

Links

DOI: https://doi.org/10.1007/s10997-019-09477-x
URL: http://link.springer.com/10.1007/s10997-019-09477-x

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