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Why Do Stock Exchanges Demutualize and Go Public?

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  • Sofia Brito Ramos

    (ISCTE and CEMAF)

Abstract

In this paper we investigate what drives the decision of stock exchanges to demutualize and going public, using a sample of 109 stock exchanges. We find that stock exchanges that demutualize and go public are in countries that have a higher level of economic and political freedom, facing greater competition from their peers. Demutualized exchanges go public to raise capital and because countries have even more freedom of capital controls. The motivation of stock exchanges to go publicly listed does not seem to be the same of “common companies”, we do not find evidence that larger, older and riskier stock exchanges go public. Stock exchanges seem to demutualize to merge, which we interpret as an additional signal of competition. We also find evidence that stock exchanges go public to make acquisitions and that they restructure internally before going public. Finally, we find regional preferences for non-demutualized exchanges. Associations are likely to come from South America, while governmental and member stock exchanges from Middle East.

Suggested Citation

  • Sofia Brito Ramos, 2006. "Why Do Stock Exchanges Demutualize and Go Public?," Swiss Finance Institute Research Paper Series 06-10, Swiss Finance Institute.
  • Handle: RePEc:chf:rpseri:rp0610
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    File URL: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=890268
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    Cited by:

    1. Hautcoeur Pierre-Cyrille & Riva Angelo E., 2013. "What Financiers Usually Do, and What We Can Learn from History," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 3(3), pages 1-19, April.
    2. repec:dau:papers:123456789/5052 is not listed on IDEAS

    More about this item

    Keywords

    stock exchanges; competition; demutualization; going public; mergers;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G29 - Financial Economics - - Financial Institutions and Services - - - Other
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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