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Can Spending Time in the Minors Pay Off? An Examination of the Canadian Junior Public Equity Markets

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  • Michele Meoli
  • J. Ari Pandes
  • Michael J. Robinson
  • Silvio Vismara

Abstract

This paper tests whether the junior public equity markets serve as an effective development market for early‐stage firms compared to private venture capital (VC). Focusing on the Canadian market, we compare the long‐run stock performance of firms that graduate from the Toronto Venture Stock Exchange (TSX‐V) to the Toronto Stock Exchange (TSX) against the performance of VC‐backed firms that have a direct IPO on the TSX. Controlling for various confounders and possible selection biases, we find that TSX‐V graduations significantly outperform VC‐backed IPOs by 28.2 percentage points in the three years following the TSX listing. Our results are consistent with the idea that a TSX‐V listing provides the insiders of early‐stage companies with valuable public‐markets experience.

Suggested Citation

  • Michele Meoli & J. Ari Pandes & Michael J. Robinson & Silvio Vismara, 2018. "Can Spending Time in the Minors Pay Off? An Examination of the Canadian Junior Public Equity Markets," Journal of Small Business Management, Taylor & Francis Journals, vol. 56(S1), pages 88-107, March.
    • Handle: RePEc:taf:ujbmxx:v:56:y:2018:i:s1:p:88-107
    DOI: 10.1111/jsbm.12392
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    Cited by:

    1. Yuji Honjo & Koki Kurihara, 2023. "Graduation of initial public offering firms from junior stock markets: evidence from the Tokyo Stock Exchange," Small Business Economics, Springer, vol. 60(2), pages 813-841, February.
    2. Hafiz Hoque, 2022. "Endogenous market choice, listing regulations and IPO spread: Evidence from the London Stock Exchange," Working Papers 2022-02, Swansea University, School of Management.

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