Why SMEs don't go public?

This is an interesting paper (by Caccavaio et al) on SMEs in Italy. The authors claim in the concluding remarks:

It is well known that the size of Italian firms is small if compared with the size of firms operating in other industrialized countries. This study confirms the intuition that the Italian economic system does not provide firms with the right incentives to grow: more precisely, this study suggests that Italian entrepreneurs keep their firms small in order to rationally respond to a set of distortive incentives provided by legislation (for example, about labor market and unions), regulation (for example, about accounting standards and tax procedures), and industrial policies.

Some robust findings:

1. Both the firms and the institutional investors recognize the importance of being listed on regulated markets to favor investments and to improve international visibility; however, both recognize that listing is costly.

2. Institutional investors think that the major obstacles to the access of SMEs to regulated markets are:  

i. The fear of entrepreneurs of losing total control over firms;  

ii. The willingness of entrepreneurs of retaining informal managerial practices; 

iii. The lack of financial literacy; 

iv. Both the firms and the institutional investors think that there is no need of having many SME-dedicated markets;  

3. Both the firms and the institutional investors claim that the Italian economic system lacks stability in terms of regulation, thus making long term strategies difficult to be implemented.

In Latin America we have so much in common with countries like Italy and Spain that it seems these results apply also to the SMEs in the LA region.