The Survival and Success of Canadian Penny Stock IPOs
We analyze the survival and success of a large sample of Canadian penny stock initial public offerings (IPOs), launched mostly by small and unprofitable firms from 1986 to 2003. The failure rate of these IPOs is lower than the one observed in the U.S. for larger IPOs, probably because of lax delisting rules and the market's capacity to refinance non-profitable firms. The survival of new issuers is significantly associated with their characteristics at the IPO and with the level of initial listing requirement they meet. The involvement of reputable intermediaries in the IPO process mitigates this effect. Success, estimated by the graduation to a senior exchange, is not linked to the financial conditions at the IPO. Overall, Canada seems to have developed a particular strategy to finance the growth of small firms even if the propensity to fail of firms listed at a pre-revenue stage is indeed very high. Nous analysons la survie et le succès d'un grand échantillon d'émissions initiales d'actions cotées en cents (les penny stocks), lancées majoritairement par des entreprises de petite taille non rentables entre 1986 et 2003. Le taux d'échec de ces émissions est moindre que celui observé aux États-Unis pour des opérations de plus grande taille. Ceci peut découler de règles de radiation plus souples et de la capacité du marché boursier canadien à refinancer des entreprises qui ne dégagent pas de bénéfices. La survie des émetteurs est significativement liée à leurs caractéristiques lors de l'émission initiale et au niveau de normes minimales qu'ils satisfont au moment de l'entrée en Bourse. L'implication d'intermédiaires de bonne réputation lors de l'émission modère cet effet. Le taux de succès, défini ici comme l'inscription sur une Bourse de niveau supérieur, est peu lié aux caractéristiques financières qui prévalent lors de l'émission. Le Canada semble avoir développé une stratégie particulière pour financer des entreprises de petite taille mais la probabilité d'échec des entreprises qui entrent en Bourse avant de rapporter des revenus reste très importante.
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