The rise and fall of the Amex Emerging Company Marketplace

In 1992, the Amex launched the Emerging Company Marketplace (ECM) to trade the stocks of small but growing companies. Bid-ask spreads decreased dramat ically for listing firms, and news coverage increased. Executives of listin g firms were quite satisfied. Yet few firms chose to list on the ECM, and i t closed in 1995. What went wrong? Most Amex stakeholders had little to gai n from the success of the ECM, and a series of scandals damaged the reputat ion of the exchange. Similar small-firm markets have also failed, largely b ecause successful firms quickly depart for traditional markets, leaving onl y unsuccessful firms behind. (C) 1999 Elsevier Science S.A. All rights rese rved.