Large shareholders and disclosure strategies: Evidence from IPO lockup expirations

Yonca Ertimur, Ewa Sletten, Jayanthi Sunder

Research output: Contribution to journalArticle

11 Scopus citations

Abstract

We examine the effect of large shareholders[U+05F3] ex ante selling incentives on firms' voluntary disclosure choices in the setting of IPO lockup expirations. We find evidence that managers delay disclosures of bad news, not for their own benefit, but to enable influential pre-IPO shareholders to sell their shares at more favorable prices. Delays are more pronounced when aggregate selling incentives are greater, when uncertainty is high, and when venture capitalists, influential investors with strong selling incentives, own more shares. Simultaneously, managers' disclosure decisions reflect litigation concerns; no significant delays occur when litigation risk is high or when managers trade themselves.

Original languageEnglish (US)
Pages (from-to)79-95
Number of pages17
JournalJournal of Accounting and Economics
Volume58
Issue number1
DOIs
StatePublished - Aug 2014

Keywords

  • IPO lockup
  • Management forecasts
  • Uncertainty
  • Venture capitalists
  • Voluntary disclosure

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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