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The Valuation Effect of Listing Requirements: An Analysis of Venture Capital-Backed IPOs

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  • Cécile Carpentier

    ()

  • Douglas Cumming

    ()

  • Jean-Marc Suret

    ()

Abstract

This paper examines the impact of securities regulation and exchange listing standards on the valuation of venture capital-backed IPOs in Canada and the United States. We use a sample of IPOs in both countries matched by size and sector over the 1986-2007 period. The data strongly indicate Canadian IPO valuations are 48% to 66% lower than their matched American counterparts, depending on the matched sample and control variables. We carefully control for several alternative explanations that might account for this difference, including issuer and VC quality, mispricing and liquidity effects. The data highlight the costs associated with low listing standards in Canada. Ce papier examine l’impact de la réglementation des valeurs mobilières et des normes minimales d’inscription en bourse sur la valorisation des premiers appels publics à l’épargne (PAPEs) effectués au Canada et aux États-Unis par des émetteurs financés par des investisseurs en capital de risque. Nous utilisons un échantillon de PAPEs dans chacun des pays sur la période 1986 à 2007. Chaque émission canadienne est pairée avec une émission américaine de taille et de secteur similaires. Nous montrons que les valorisations des émissions canadiennes sont de 48 % à 66 % plus basses que celles des émissions correspondantes américaines, en fonction de l’échantillon retenu et des variables de contrôle. Cette différence subsiste à la prise en compte de plusieurs variables de contrôle, notamment la qualité des émetteurs et des investisseurs en capital de risque, ainsi que la liquidité. Les résultats montrent que les normes réglementaires permissives appliquées aux entreprises émergentes au Canada ont un effet perceptible sur la valeur que leur attribuent les investisseurs.

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Bibliographic Info

Paper provided by CIRANO in its series CIRANO Working Papers with number 2010s-01.

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Date of creation: 01 Jan 2010
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Handle: RePEc:cir:cirwor:2010s-01

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Keywords: Securities Regulation; Listing Standards; Valuation; Initial Public Offerings; réglementation des valeurs mobilières; normes minimales d’inscription en bourse; valorisation; introduction en bourse;

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