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Corporate Governance in Small Companies – the Alternative Investment Market

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  • Chris Mallin
  • Kean Ow‐Yong

Abstract

This paper examines corporate governance in small companies listed on the Alternative Investment Market (AIM) which was established in the UK in 1995. The London Stock Exchange rules stipulate that each company wishing to join AIM must have a nominated advisor and broker. The nominated advisor is seen as playing a key role in AIM companies, enjoying an ongoing advisory relationship as well as playing a monitoring role. The presence of the nominated advisor may, in some ways, mean that less emphasis is placed on formal corporate governance structures, as the nominated advisor does have a close relationship with the company it advises. The formal aspects of corporate governance are analysed in terms of disclosures in the admission document put forward by AIM companies coming to market. Preliminary findings suggest AIM companies brought onto the market by a nominated advisor who also acts as the nominated broker pay more attention to the Cadbury Code on corporate governance. Also, the study suggests AIM companies raising no new capital on admission possess relatively weaker corporate governance structures. The success of AIM, with over 240 companies having joined in the first 18 months of its existence, means that our findings have implications for policy‐makers involved in corporate governance not only in the UK but also for those involved in the establishment of markets for small companies in a global context.

Suggested Citation

  • Chris Mallin & Kean Ow‐Yong, 1998. "Corporate Governance in Small Companies – the Alternative Investment Market," Corporate Governance: An International Review, Wiley Blackwell, vol. 6(4), pages 224-232, October.
    • Handle: RePEc:bla:corgov:v:6:y:1998:i:4:p:224-232
    DOI: 10.1111/1467-8683.00111
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    Cited by:

    1. Dirk Akkermans & Hans Van Ees & Niels Hermes & Reggy Hooghiemstra & Gerwin Van der Laan & Theo Postma & Arjen Van Witteloostuijn, 2007. "Corporate Governance in the Netherlands: an overview of the application of the Tabaksblat Code in 2004," Corporate Governance: An International Review, Wiley Blackwell, vol. 15(6), pages 1106-1118, November.
    2. Gordon, Irene M. & Hrazdil, Karel & Shapiro, Daniel, 2012. "Corporate governance in publicly traded small firms: A study of Canadian venture exchange companies," Business Horizons, Elsevier, vol. 55(6), pages 583-591.
    3. Valérie Revest & Alessandro Sapio, 2012. "Financing technology-based small firms in Europe: what do we know?," Small Business Economics, Springer, vol. 39(1), pages 179-205, July.
    4. Carmen Barroso-Castro & Marta Domínguez de la Concha Castañeda & Mª de los Ángeles Rodríguez Serrano, 2022. "Listed SMEs and innovation: the role of founding board members," International Entrepreneurship and Management Journal, Springer, vol. 18(2), pages 901-934, June.
    5. Marc Goergen & Christine A. Mallin & Eve Mitleton-Kelly & Ahmed Al-Hawamdeh & Iris H-Y Chiu, 2010. "Corporate Governance and Complexity Theory," Books, Edward Elgar Publishing, number 13927.
    6. Roscoe, Philip & Willman, Paul, 2021. "Flaunt the imperfections: information, entanglements and the regulation of London’s Alternative Investment Market," LSE Research Online Documents on Economics 114480, London School of Economics and Political Science, LSE Library.

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