DO STOCK MARKETS HAVE A NEGATIVE ATTITUDE TO SMEs? FINDINGS ON THE ITALIAN MARKET by

The research target is to explore the relation between the fundamental performance and the market pricing for SME which have floated in the Italian stock market in the period 1994 2000. The fundamental performance is defined as the degree of consistency between the financial results obtained in the years immediately after the listing process and the enterprise’s objectives declared at the listing stage in the prospectus. The single share market valuation is measured as its underperformance or outperformance compared with the general market trend expressed by a suitable index. We expect that enterprises which are consistent ex post with their declarations in prospectuses and create value to shareholders have a market valuation at least in line with the stock market performance or outperform it. Empirical evidence shows that Italian stock market has basically a bias against SME IPOs because it is very good in valuation of the majority of inconsistent companies but at the same time, it excessively penalised the consistent companies. (*) The author wishes to thank Daniela Genua for her invaluable contribution to the conduct of the research and Prof. R. Ruozi and A. Sironi for their useful suggestions. The usual disclaimer applies. JEL Classification: G14, G15, G24, G32.