IPO survival in a reputational market

We examine IPO survival in a 'reputational' market, the Alternative Investment Market (AIM), where principle-based regulation pivots on the role of a regulatory agent, the nominated advisor (Nomad) to the IPO company. We find that Nomad reputation has a significant impact on IPO survival. IPOs backed by reputable Nomads 'survive longer (by about two years) than those backed by other Nomads. We also find that survival rates of AIM IPOs are broadly comparable to those of North American IPOs. While these results are of obvious interest to various stakeholders of AIM firms, they also provide important lessons for market places modeled on AIM including the upper-tier of the US over-the-counter market (OTCQX), Italy's AIM Italia, and Japan's Tokyo AIM. © 2012 Blackwell Publishing Ltd.