This article shows that a junior market can be an effective financing strategy for growth-oriented entrepreneurs who want to list on a senior stock exchange. We analyze 209 graduations from the Canadian junior market (TSXV) benchmarked with 191 initial public offerings (IPOs) on the senior exchange (TSX). Graduations are as frequent as IPOs, and the probability of reaching the TSX is significantly higher for TSXV firms than for venture capital-backed firms. The growth rate of revenues is significantly higher before graduations than before IPOs, allowing TSXV firms to reach the TSX earlier. Investors value both groups of firms similarly, indicating comparable perceived quality. In Canada, the junior market is a valuable financing strategy for growth-oriented entrepreneurs. It fulfills its role of fostering the development of innovative firms and feeding the senior exchange. However, the choice of the TSXV reduces entrepreneur ownership interest compared with the IPO strategy.



View the document

Center for Interuniversity Research and Analysis of Organizations
1130 rue Sherbrooke Ouest, suite 1400
Montréal, Québec (Canada) H3A 2M8
(514) 985-4000
(514) 985-4039
reception@cirano.qc.ca

© 2018 CIRANO. All rights reserved.



Partner of :