Abstract

This study examines stock price reaction to IPO lockup expiration in the Middle East and North Africa (MENA). A lockup is the period of time following an IPO during which founders and insiders are not allowed to sell their shares. Lockups in the MENA region are generally longer and more varied than those in the United States, providing an opportunity to study the relationship between their duration and market reaction. I test whether, as in the United States, there is an abnormal increase in trading volume and negative abnormal return around the unlock date, and find that contrary to the United States there is no noticeable reaction. I provide evidence that the difference in market reactions of U.S. and MENA companies is partly attributable to the laws in the MENA region, which dampens or more strongly restricts selling by insiders during the IPO period