Le Lézard
Classified in: Business
Subjects: ECO, AVO

IPOs: The United States should take a page from Canada


MONTREAL, Aug. 7, 2019 /CNW Telbec/ - Sharing economy giants like Uber and Airbnb took more than ten years before finally holding an initial public offering this year; in the 1990s, Yahoo and Amazon took just one and three years, respectively. An MEI publication launched today shows that these delays are due, among other things, to the fact that the United States is increasingly closed to regular investors.

"American public markets are now a plaything of the rich. They have become inaccessible to regular investors who don't have the million dollars needed before a venture capital fund manager will even return their phone calls," explains Peter St. Onge, Senior Fellow at the MEI and co-author of the publication. "Compliance costs and risks have become so significant that small businesses are pushed out."

Indeed, it can cost as little as $50,000 to list on the TSX-Venture exchange and requires only $500,000 in annual business revenue. The comparable US thresholds are several times as high.

It is therefore not surprising to find that the number of companies listed on public markets has plunged by about half since the 1990s, and by nearly a quarter since the 2002 Sarbanes-Oxley bill, which imposed new, more restrictive accounting and financial transparency rules.

"Canada has done quite well after the adoption of this US law, having implemented much more flexible regulation," adds Michel Kelly-Gagnon, President and CEO of the MEO and co-author of the study. "Canada's public listings almost tripled in the first year following this major reform, and continued to climb in the ensuing decade."

This decline in the United States echoes across the start-up world. In 1996, public markets were the primary outlet (70%) for venture capital investors, but today, roughly 85% of such exits are via mergers and acquisitions.

While Canada can be proud of its prudent regulators, there remains much work to be done. In the past six years, the relative trend has reversed. Compliance costs here have risen, as have the number of shareholder lawsuits.

"Canada must certainly not follow in the footsteps of the United States. It must instead improve its IPO model in order to bring more investing opportunities to all Canadians, and improve young entrepreneurs' access to capital," concludes Mr. St. Onge.

The Viewpoint entitled "Canada Shows the Way on Stock Markets" was prepared by Peter St. Onge, Senior Fellow at the MEI, and Michel Kelly-Gagnon, President and CEO of the MEI. This publication is available on our website.

The MEI is an independent public policy think tank. Through its publications and media appearances, the MEI stimulates debate on public policies in Quebec and across Canada by proposing reforms based on market principles and entrepreneurship.

SOURCE Montreal Economic Institute


These press releases may also interest you

at 12:27
International Maritime Industries (IMI) announced today they had signed two "Rig Purchase Agreement's" (RPA's) with ARO; a world-class offshore drilling contractor that owns, operates, and manages a fleet of high-specification and premium jack-up...

at 11:15
ARO Drilling, a 50/50 joint venture between Saudi Arabian Oil Company ("Saudi Aramco") and Valaris plc, announced today its signing of two contracts with International Maritime Industries ("IMI") for the construction of two LETOURNEAUtm Super 116E...

at 11:10
Compare-autoinsurance.org has launched a new blog post that presents several popular methods used to lower the price of car insurance premiums. For more info and free quotes, visit...

at 10:10
Compare-autoinsurance.org has launched a new blog post that explains how the zip code can affect the price of car insurance premiums. For more info and free quotes, visit https://compare-autoinsurance.org/why-car-insurance-varies-by-zip-code/ Car...

at 09:10
Compare-autoinsurance.org has launched a new blog post that explains what advantages are gained by using free online car insurance quotes. For more info and free quotes, visit...

at 09:00
Health care merger and acquisition activity essentially held steady in the fourth quarter of 2019, compared with the third quarter. The number of deals announced fell 3%, to 442, compared with the previous quarter's 456 transactions, and was 12%...



News published on 7 august 2019 at 06:00 and distributed by: