The lockup is an agreement between issuing firms and underwriting investment bankers that prohibits firm insiders from selling shares prior to lockup expiry. Using a manually corrected sample of 7546 SEOs between 1988 and 2007, this study investigates the role of these agreements by separately...

Studies have analyzed the impact of firm and issue characteristics but not liquidity and solvency components of financial distress on the use of bond covenants. Using a comprehensive database of corporate bonds from 2001 to 2012, we find that firm liquidity, measured by standardized Lambda, has...