The Determinants of Performance in Alternative Markets for Small and Medium Enterprises: International Evidence

Several stock exchanges have launched alternative markets to target small and medium enterprises. In this research, we examine the determinants of the operating and stock return performance of alternative markets. Our results suggest that turnover and stock returns of alternative markets affect each other. Hence, it is imperative to examine the performances of alternative markets in a simultaneous equation system to mitigate the causality among performance variables. In addition, a good anti-director rights environment and a noncommon law origin country contribute to a higher turnover and additional new listings in an alternative market. A common law origin country, all else the same, contributes to higher alternative market stock returns. A high index of economic freedom negatively correlates with the turnover of an alternative market. The accounting standard and the governance structure of an exchange are not related to the operating and stock return performance in alternative markets. This research contributes to stock market development by focusing on alternative markets.