IPO performance and the size effect: Evidence for the US and Canada

Lorne Switzer, Nabil El Meslmani and Xinkai Zhai

The North American Journal of Economics and Finance, 2022, vol. 62, issue C

Abstract: This study provides new evidence on the interaction between firm size and IPO underpricing in the US and Canadian markets. We find a size effect on IPO underpricing in both Canada and the US, which is larger for Canadian firms. Canadian small firms show more underpricing than US small firms (19.32% vs. 13.87%). Large Canadian firms also exhibit more underpricing than their US counterparts over the sample period (12.83% vs. 10.09%). A size effect on performance is not apparent for holding periods beyond six months from the IPO in both countries, consistent with seasoning effects that reduce information asymmetries across firms over longer investment horizons.

Keywords: IPO performance; Size effects; Short-term information asymmetries; Country variations (search for similar items in EconPapers)
JEL-codes: G01 G11 G12 G14 G15 G20 G24 G30 G38 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:62:y:2022:i:c:s1062940822000924

DOI: 10.1016/j.najef.2022.101744

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