Does the alternative investment market nurture firm growth? A comparison between listed and private companies

Valérie Revest and Sandro Sapio ()

Industrial and Corporate Change, 2013, vol. 22, issue 4, 953-979

Abstract: The creation of stock market segments with low admission requirements was welcomed in the 1990s as an essential move to release small- and medium-sized enterprises from their dependency on banks for external funding, thereby removing the financial barriers that hinder their growth and competitiveness. But does easier access to public equity really translate into superior real performance? We explore this issue by focusing on the Alternative Investment Market (AIM), a "junior" segment of the London Stock Exchange that has experienced long-lasting growth in capitalization. The ability of AIM to nurture the growth of its listed companies is assessed by comparing the growth rates of AIM-listed and private manufacturing companies between 1997 and 2009. We use econometric methods that allow the treatment effect of being listed on AIM, related to fund raising and supervision by Nominated Advisers (Nomads), to be disentangled from selection effects. After controlling for endogeneity of the listing choice, the results show that AIM selects companies with superior performance in terms of operating revenues and total assets growth, and that it is able to nurture the growth of employees of its listed companies. Yet we detect a negative treatment effect of AIM on productivity, suggesting that growth in employees is not matched by superior growth in value added. We conjecture that financialization lies behind this result; hence, if the goal of policy-makers is to achieve successful industrial performance, their endorsement of lightly regulated stock markets may be misplaced. Copyright 2013 The Author 2013. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.

Date: 2013
References: Add references at CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://hdl.handle.net/10.1093/icc/dtt021 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Does the Alternative Investment Market nurture firm growth ? A comparison between listed and private companies (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:indcch:v:22:y:2013:i:4:p:953-979

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

Industrial and Corporate Change is currently edited by Josef Chytry

More articles in Industrial and Corporate Change from Oxford University Press and the Associazione ICC Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK.
Bibliographic data for series maintained by Oxford University Press ().