Handbook of Research on IPOs
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Handbook of Research on IPOs

Edited by Mario Levis and Silvio Vismara

The Handbook of Research on IPOs provides a comprehensive review of the emerging trends and directions in the global initial public offerings (IPO) markets. The empirical evidence included in the book covers Europe, the US and the Far East, and presents a truly global perspective of IPO markets around the world and at the different stages of the entire IPO process.
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Chapter 21: The IPO as an exit strategy for venture capitalists: regional lessons from Canada with international comparisons

Douglas Cumming and Sofia Johan


The quantity and quality of innovation capital is essential for the success of the development of knowledge-based growth firms in the twenty-first century (Audretsch, 2007a, 2007b). In this regard, government bodies around the world provide much needed support to entrepreneurs and innovators in their capital raising efforts (see, for example, Cumming, 2007 World Bank, 2004) to facilitate the healthy growth of knowledge-based economies. This support comes in the form of indirect government intervention with tax subsidies and other entrepreneur-friendly regulation (for example, lenient bankruptcy laws and lax securities laws), as well as direct government programs to provide capital for entrepreneurs. One rationale for this support is that there is a perception of the existence of a capital gap for entrepreneurs, since the risks to financing early stage high-technology firms is very pronounced and the rewards not sufficient to entice enough investors. A second rationale is that there are returns to society for having innovation and entrepreneurship. Since the private returns do not account for the social returns, there is an insufficient supply of capital for innovation and entrepreneurship.

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