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Abstract

In recent years, demutualized stock exchanges have been increasingly engaging in M&A and alliance activities. To examine the effect of these growth strategies on exchange shareholders’ value creation, we focus on 14 public stock exchanges and investigate their short-run share price responses to the formation of 110 M&As and alliances all over the world spanning the period 2000-2008. Our findings show that the average stock price responses for M&As and alliances are positive. M&As create more value than alliances. For alliances, joint ventures generate more value than non-equity alliances. More value accrues when the integration is horizontal (cross-border) than when it is vertical (domestic). Additionally, there is evidence of learning-by-doing effects in stock exchange integration activities. Finally, we find that the better the shareholder protection, accounting standards and capital market development in the partner exchange’s country, the higher the merger and alliance premium for our sample exchange. These patterns are consistent when we examine the exchanges’ long-run performance. JEL Classification: L22, G32, D23.

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File URL: http://hdl.handle.net/10.1111/j.1540-6288.2012.00337.x
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Bibliographic Info

Article provided by Eastern Finance Association in its journal The Financial Review.

Volume (Year): 47 (2012)
Issue (Month): 3 (08)
Pages: 469-499

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Handle: RePEc:bla:finrev:v:47:y:2012:i:3:p:469-499

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Web page: http://www.easternfinance.org/
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Find related papers by JEL classification:

• D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
• G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
• L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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1. Gomes-Casseresa, Benjamin & Hagedoorn, John & Jaffe, Adam B., 2006. "Do alliances promote knowledge flows?," Open Access publications from Maastricht University urn:nbn:nl:ui:27-12183, Maastricht University.
   
   • Gomes-Casseres, Benjamin & Hagedoorn, John & Jaffe, Adam B., 2006. "Do alliances promote knowledge flows?," Journal of Financial Economics, Elsevier, vol. 80(1), pages 5-33, April.
   • Benjamin Gomes-Casseres & John Hagedoorn & Adam B. Jaffe, 2002. "Do Alliances Promote Knowledge Flows?," NBER Chapters, in: Corporate Alliances National Bureau of Economic Research, Inc.

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