Listing Choices and Self-Regulation: The Experience of the AIM

62 Pages Posted: 13 Jan 2011 Last revised: 19 Sep 2012

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

Multiple version iconThere are 2 versions of this paper

Date Written: January 12, 2011

Abstract

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.

Keywords: Securities Regulation, International Accounting

JEL Classification: F30

Suggested Citation

Gerakos, Joseph J. and Lang, Mark H. and Maffett, Mark G., Listing Choices and Self-Regulation: The Experience of the AIM (January 12, 2011). Chicago Booth Research Paper No. 11-04. Available at SSRN: https://ssrn.com/abstract=1739137 or http://dx.doi.org/10.2139/ssrn.1739137

Joseph J. Gerakos (Contact Author)

Tuck School of Business at Dartmouth College ( email )

Hanover, NH 03755
United States

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

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

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