Listing Choices and Self-Regulation: The Experience of the AIM
Joseph J. Gerakos
Tuck School of Business at Dartmouth College
Mark H. Lang
University of North Carolina at Chapel Hill
Mark G. Maffett
University of Chicago - Booth School of Business
January 12, 2011
Chicago Booth Research Paper No. 11-04
We compare companies listing on the London AIM to regulated exchanges in the US and UK. The AIM is unique in that it is privately-regulated and relies on Nominated Advisors to provide oversight rather than traditional regulators. We find that AIM firms perform poorly on a variety of dimensions. Their post-listing returns significantly underperform stocks on other exchanges. Liquidity is low and there is evidence of substantial information asymmetry. Results are similar across subsets of firms including US firms that directly list on AIM, firms that cross list, and domestic listings. AIM firms do not appear to distinguish themselves through choice of Nomad. Failure rates are very high and there is no evidence that significant numbers develop into “highfliers” or graduate to better exchanges. AIM stocks even underperform stocks that trade on the unregulated “Pink Sheets” in the US, inconsistent with a significant bonding effect of AIM listing.
Number of Pages in PDF File: 62
Keywords: Securities Regulation, International Accounting
JEL Classification: F30
Date posted: January 13, 2011 ; Last revised: September 19, 2012
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