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The Rise and Fall of the AMEX Emerging Company Marketplace

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  • REENA AGGARWAL
  • JAMES J. ANGEL

    () (Georgetown University School of Business)

Abstract

In 1992, the AMEX launched the Emerging Company Marketplace (ECM) to trade the stocks of small but growing companies. After listing on the ECM, stocks experienced dramatic decreases in bid-ask spreads, but showed mixed results on price and trading volume. News coverage of the ECM stocks rose significantly. Yet few firms chose to list on the new ECM, and the AMEX closed it in 1995. What went wrong? A series of scandals tarred the image of the exchange. Furthermore, auction markets historically have not fared well against dealer markets for very small firms. For some companies, it is worthwhile to subsidize the distribution channel for their stock by listing in a higher transaction cost dealer market, which gives dealers incentive to publicize the firm.

Suggested Citation

  • Reena Aggarwal & James J. Angel, "undated". "The Rise and Fall of the AMEX Emerging Company Marketplace," Working Papers _002, Georgetown School of Business.
  • Handle: RePEc:wop:gesbwp:_002
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    Cited by:

    1. Dewenter, Kathryn L. & Field, Laura Casares, 2001. "Investment bank reputation and relaxed listing requirements: Evidence from infrastructure firm IPOs in Hong Kong," Pacific-Basin Finance Journal, Elsevier, vol. 9(2), pages 101-117, April.
    2. Cécile Carpentier & Jean-François L'Her & Jean-Marc Suret, 2008. "Stock Exchange Markets for New Ventures," CIRANO Working Papers 2008s-12, CIRANO.
    3. Fariz Huseynov, 2010. "Review of CIS Stock Markets: Future Perspectives," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 17(1), pages 63-79, May.
    4. Jay R. Ritter & Andrea Signori & Silvio Vismara, 2013. "Economies of scope and IPO activity in Europe," Chapters,in: Handbook of Research on IPOs, chapter 1, pages 11-34 Edward Elgar Publishing.
    5. Lin, Wen-Chun & Liao, Tsai-Ling, 2015. "Exchange listing type and firm financial reporting behavior," International Review of Economics & Finance, Elsevier, vol. 38(C), pages 234-249.
    6. Wai-yan Cheng & Yan-leung Cheung & Yuen-ching Tse, 2005. "The Impact on IPO Performance of More Stringent Listing Rules with a Pre-listing Earnings Requirement: Evidence from Hong Kong," Working Papers 172005, Hong Kong Institute for Monetary Research.
    7. Paul Clyde, 1999. "Is it Efficient to Impose Costs on Small-Volume Equity Traders?," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 6(1), pages 81-92.
    8. John Board & Alfonso Dufour & Charles Sutcliffe & Stephen Wells, 2005. "A False Perception? The relative riskiness of AIM and listed Stocks," ICMA Centre Discussion Papers in Finance icma-dp2006-01, Henley Business School, Reading University.
    9. Rhee, S. Ghon & Wu, Feng, 2012. "Anything wrong with breaking a buck? An empirical evaluation of NASDAQ's $1 minimum bid price maintenance criterion," Journal of Financial Markets, Elsevier, vol. 15(2), pages 258-285.
    10. Anne Fremault Vila & John Board, 1998. "Liquidity in Second Tier Equity Markets: Evidence From Londons Alternative Investment Market (AIM)," FMG Discussion Papers dp301, Financial Markets Group.
    11. Cécile Carpentier & Jean-Marc Suret, 2009. "The Survival and Success of Canadian Penny Stock IPOs," CIRANO Working Papers 2007s-28, CIRANO.
    12. Carpentier, Cécile & L'Her, Jean-François & Suret, Jean-Marc, 2010. "Stock exchange markets for new ventures," Journal of Business Venturing, Elsevier, vol. 25(4), pages 403-422, July.

    More about this item

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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