Doctor of Philosophy (PhD)



Document Type



The dissertation includes two chapters. The title of the first chapter is “How Divergence of Opinions Matters: Evidence from Lockup Effects in VC-backed IPOs”. The title of the second chapter is “Short-selling Around IPO Lockup Expiration”.

The first chapter discusses how divergence of investor opinions plays a role in explaining IPO lockup effects in venture capital backed (VC-backed) IPOs. It is well established that IPO lockup expiration is associated with negative cumulative abnormal returns (CARs). While a number of studies have examined these lockup effects, they offer very limited explanations to the phenomenon. Miller (1977) suggests that divergence of investor opinions with short-sale constraints affect security’s fundamental value. In the first chapter, I conduct a direct test of Miller’s theory in an IPO lockup setting for IPOs issued during the period of 2001 to 2014. Using two measures - venture capital (VC) divergence and analyst forecast dispersion as proxies, the results suggest that divergence of investor opinions is an important determinant in explaining lockup effects. Controlling for IPO characteristics, firm characteristics, and market timing, the divergence of investor opinions are strongly associated with IPOs’ negative CARs upon lockup expirations. Further, by using hand-collected VC ownership data, I estimate that VC funds distribute between 42.84% and 50.58% of their pre-IPO ownership within the first month upon lockup expiration. Finally, consistent with prior literature, I find that lockup effects are concentrated only among those VC-backed IPOs, with mean market-adjusted CARs being -3.20% in a (-5, +1) event window and -2.20% in a (-1, +1) event window, respectively. The second chapter discusses short-selling around IPO lockup expiration. Using proprietary daily lending data and hand-collected VC ownership data, I investigate how short-selling is anticipative of VCs’ distributions of their ownership upon IPO lockup expiration and use arbitrage despite of short-sale constraints. First, I document that the level of short-selling is highest around lockup expiration date. Second, on a cross-sectional basis, the level of abnormal short-selling is greater when VC ownership reduction is higher. Overall, my study suggests that short-selling is prevalent around IPO lockup expiration date and short-selling is anticipative of VC ownership reduction.



Committee Chair

Sanger, Gary



Available for download on Tuesday, April 01, 2025