Abstract

http://ssrn.com/abstract=1740809
 
 

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Post-Listing Performance and Private Sector Regulation: The Experience of the AIM


Joseph Gerakos


University of Chicago - Booth School of Business

Mark H. Lang


University of North Carolina at Chapel Hill

Mark G. Maffett


University of Chicago - Booth School of Business

February 1, 2013

Chicago Booth Research Paper No. 13-14

Abstract:     
We investigate the post-listing experience of companies raising capital on the London Stock Exchange’s Alternative Investment Market (AIM). The AIM is unique in that it is privately regulated and relies on Nominated Advisors (Nomads) who compete to bring new listings and provide ongoing regulatory oversight. We find that AIM firms significantly underperform firms on regulated exchanges in terms of post-listing returns and failure rates. The underperformance is similar to that of firms listing on the OTC Bulletin Board prior to SEC regulation. Underperformance is associated with abnormally high pre-listing accruals and post-listing reversals, and is more pronounced for firms raising capital. The choice of a “high quality” auditor or Nomad partially mitigates underperformance, suggesting that AIM firms have a limited ability to bond through commitments to more stringent oversight. Negative returns are particularly pronounced for firms with high proportions of retail investors.

Number of Pages in PDF File: 66

Keywords: Securities Regulation, Post-IPO Performance, International Accounting

JEL Classification: F30, G18, G32, G38

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Date posted: January 16, 2011 ; Last revised: February 24, 2013

Suggested Citation

Gerakos, Joseph and Lang, Mark H. and Maffett, Mark G., Post-Listing Performance and Private Sector Regulation: The Experience of the AIM (February 1, 2013). Chicago Booth Research Paper No. 13-14. Available at SSRN: http://ssrn.com/abstract=1740809 or http://dx.doi.org/10.2139/ssrn.1740809

Contact Information

Joseph J. Gerakos
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Ave.
Chicago, IL 60637
United States
773-834-6882 (Phone)
Mark H. Lang
University of North Carolina at Chapel Hill ( email )
Kenan-Flagler Business School
McColl Building
Chapel Hill, NC 27599-3490
United States
919-962-1644 (Phone)
919-962-4727 (Fax)

Mark G. Maffett (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

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