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

摘要

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 resu hence, if the goal of policy-makers is to achieve successful industrial performance, their endorsement of lightly regulated stock markets may be misplaced.