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Entrepreneurs and Junior Markets: An Assessment

Cécile Carpentier and Jean-Marc Suret

CIRANO Working Papers from CIRANO

Abstract: This article shows that a junior market can be an effective financing strategy for growth-oriented entrepreneurs who want to list on a senior stock exchange. We analyze 209 graduations from the Canadian junior market (TSXV) benchmarked with 191 initial public offerings (IPOs) on the senior exchange (TSX). Graduations are as frequent as IPOs, and the probability of reaching the TSX is significantly higher for TSXV firms than for venture capital-backed firms. The growth rate of revenues is significantly higher before graduations than before IPOs, allowing TSXV firms to reach the TSX earlier. Investors value both groups of firms similarly, indicating comparable perceived quality. In Canada, the junior market is a valuable financing strategy for growth-oriented entrepreneurs. It fulfills its role of fostering the development of innovative firms and feeding the senior exchange. However, the choice of the TSXV reduces entrepreneur ownership interest compared with the IPO strategy.

Keywords: Junior Market; Graduation; Initial Public Offering; Small Firm; Stock Exchange (search for similar items in EconPapers)
JEL-codes: G32 G38 O16 M13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cfn and nep-ent
Date: 2018-05-10
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Persistent link: https://EconPapers.repec.org/RePEc:cir:cirwor:2018s-18

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