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Post-listing performance and private sector regulation: The experience of London's Alternative Investment Market

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  • Gerakos, Joseph
  • Lang, Mark
  • Maffett, Mark

Abstract

We investigate the experience of companies listing and raising capital on the AIM, which is privately regulated and relies on Nominated Advisors who compete for listings and provide regulatory oversight. AIM firms underperform newly listed firms on traditionally regulated exchanges based on post-listing returns and failure rates, comparable to firms listing on the unregulated US Pink Sheets, and exhibit abnormally high pre-listing accruals and post-listing reversals. “High quality” auditors and Nomads partially mitigate underperformance, suggesting that AIM firms have limited ability to bond through more stringent oversight. Underperformance is particularly pronounced for firms with higher proportions of retail investors.

Suggested Citation

  • Gerakos, Joseph & Lang, Mark & Maffett, Mark, 2013. "Post-listing performance and private sector regulation: The experience of London's Alternative Investment Market," Journal of Accounting and Economics, Elsevier, vol. 56(2), pages 189-215.
  • Handle: RePEc:eee:jaecon:v:56:y:2013:i:2:p:189-215
    DOI: 10.1016/j.jacceco.2013.08.004
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    Cited by:

    1. repec:eee:finana:v:56:y:2018:i:c:p:238-252 is not listed on IDEAS
    2. Kim, Abby, 2014. "The value of firms' voluntary commitment to improve transparency: The case of special segments on Euronext," Journal of Corporate Finance, Elsevier, vol. 25(C), pages 342-359.
    3. Espenlaub, Susanne & Goyal, Abhinav & Mohamed, Abdulkadir, 2016. "Impact of legal institutions on IPO survival: A global perspective," Journal of Financial Stability, Elsevier, vol. 25(C), pages 98-112.
    4. Khurshed, Arif & Kostas, Dimitris & Saadouni, Brahim, 2016. "Warrants in underwritten IPOs: The Alternative Investment Market (AIM) experience," Journal of Corporate Finance, Elsevier, vol. 40(C), pages 97-109.
    5. Isabel Feito-Ruiz & Clara Cardone-Riportella & Susana Menéndez-Requejo, 2014. "SMEs’ Delisting Decisions on the Alternative Investment Market (AIM): Family Holders and Financial Crisis," Working Papers 14.02, Universidad Pablo de Olavide, Department of Financial Economics and Accounting (former Department of Business Administration).
    6. Campbell, Kevin & Tabner, Isaac T., 2014. "Bonding and the agency risk premium: An analysis of migrations between the AIM and the Official List of the London Stock Exchange," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 30(C), pages 1-20.
    7. Valérie Revest & Alessandro Sapio, 2016. "Graduation and sell-out strategies in the Alternative Investment Market," Discussion Papers 4_2016, CRISEI, University of Naples "Parthenope", Italy.
    8. repec:eee:corfin:v:48:y:2018:i:c:p:217-243 is not listed on IDEAS
    9. Deng, Qi & Zhou, Zhong-guo, 2016. "Overreaction in ChiNext IPOs' initial returns: How much and what caused it?," Emerging Markets Review, Elsevier, vol. 29(C), pages 82-103.
    10. repec:eee:advacc:v:38:y:2017:i:c:p:46-62 is not listed on IDEAS
    11. Valerie Revest & Alessandro Sapio, 2016. "The creation function of a junior listing venue: An empirical test on the Alternative Investment Market," LEM Papers Series 2016/32, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.

    More about this item

    Keywords

    Securities regulation; Post-IPO performance; International accounting;

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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