An examination of IPO performance in Canada's manufacturing industry

Abstract

This paper investigates the IPO price performance of Canada’s manufacturing firms. We examine the theory and evidence on IPO activities: in the manufacturing sector based on first day of trading, and the long run IPO performance with respect to different benchmarks. The result shows that IPOs are underpriced in the initial issue period. However, the IPO performance which relative to S&P/TSX composite index confirms that it is overpriced in the long run, while the performance which relative to Dow Jones Industrial average index shows the IPO is underprice.