Alternative Investment Market: A Way to Promote Entrepreneurship
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The aim of this paper is to investigate the relationship between firm performance after the IPO and its entrepreneurial orientation (EO). In our work we want to test if entrepreneurial oriented firms show a better market performance signalling that investors valuate it positively. To this purpose, we focus on a particular sample of entrepreneurial firms, i.e. companies that went public on the Alternative Investment Market (AIM) through IPO during the period from 1995 to 2006. Along the lines of Miller (Manage Sci 29:770–791, 1983), Covin and Slevin (Entrep Theory Pract 16:7–25, 1991) and Lumpkin and Dess (Acad Manage Rev 21:135–172, 1996), firms’ entrepreneurial orientation is measured in terms of risk taking, innovation and proactivity. Following the literature in management on investor valuation we use the percent price premium as dependent variable of our model. Our findings confirm a positive impact of entrepreneurial orientation on investors’ valuation. The results of this work underline the relevance of secondary markets, such as the AIM, as a valuable alternative to traditional financial institutions in providing capital to small and entrepreneurial companies.
Keywordsentrepreneurial orientation firm market performance IPOs top management team
JEL ClassificationD21 G3 M13
The author wishes to thank Cristiano Antonelli, Lucio Cassia, Arif Khurshed, Francesco Quatraro, Stefano Paleari and Nick Von Tunzelmann for help and useful suggestions. Preliminary versions have been presented at the RENT Conference and Ceris-CNR seminar series. The author is grateful for the useful comments of many participants. The financial support of the Marie Curie Fellowship Programme (Grant Ref.: MEST-CT-2004-504299), University of Bergamo and Collegio Carlo Alberto are acknowledged.
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