In Canada, initial public offerings (IPOs) have decreased sharply over the past twenty years, inducing potentially substantial negative effects on the economy. The reasons for this decrease are controversial. To contribute to the debate, we analyze the Canadian IPO market over three decades (1986-2016). First we illustrate its specificities using IPOs on the main and the venture stock exchanges and using other junior markets a benchmark. We discuss the evolution of the IPOs, which differs considerably between natural resource and non-natural resource firms. We then provide empirical evidence based on 2,145 Canadian IPOs. On average, these IPOs generate three-year negative abnormal returns, and more than 70% report negative abnormal returns. Large issuers reporting profits constitute the only subsample that provides fair returns, but they account for less than 5% of IPOs. We observe a high level of skewness of abnormal returns, consistent with the behavioral finance proposition that investors are often unduly optimistic when valuing lottery stocks. The lemon market characteristics of the Canadian IPO market can probably explain why it is vanishing.



Voir le document

Dernières publications

2018s-35 CS
Homeownership, Labour Market Transitions and Earnings
Thierry Kamionka et Guy Lacroix
Voir le document

2018s-33 CS
Demand for Annuities: Price Sensitivity, Risk Perceptions, and Knowledge
M. Martin Boyer, Sébastien Box-Couillard et Pierre-Carl Michaud
Voir le document

2018RP-12 RP
Economic Impact From Farm Investments in Canada
Maurice Doyon et Stéphane Bergeron
Voir le document


Centre interuniversitaire de recherche en analyse des organisations
1130 rue Sherbrooke Ouest, suite 1400
Montréal, Québec (Canada) H3A 2M8
(514) 985-4000
(514) 985-4039
reception@cirano.qc.ca

© 2018 CIRANO. Tous droits réservés.



Partenaire de :