Is the Alternative Investment Market a Model for Financing Small and Medium Capitalizations?

Valérie REVEST Université Lyon 2, TRIANGLE ; chercheur associé, CEPN. Contact : valerie.revest@univ-lyon2.fr.

Alessandro SAPIO DES, Università di Napoli Parthenope (Italie) ; LEM (Laboratory of Economics and Management), Sant’Anna School of Advanced Studies, Pise (Italie).

The Alternative Investment Market (AIM), a stock market dedicated to small and medium capitalizations, has been created in 1995 by the London Stock Exchange (LSE). The AIM is viewed nowadays as a model for numerous stock markets with a similar target. It relies on a specific market model, where private intermediaries, the Nomads, replace, to a certain extent, the LSE regulation. This paper investigates on the nature of the AIM success. We shed light on the strengths and the weaknesses, through a review of the empirical literature. On the one hand, the AIM is characterized by a high rate of new IPOs, seasoned offerings, and voluntary exits. On the other hand, the operational performances of the AIM-listed companies appear to be lower than those for similar firms on other stock markets, thereby casting doubts on the role of AIM as a stepping stone for innovative firms. The conclusions of the article offer some insights for policy-makers considering the creation of new junior markets.