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Stock exchange demutualization and performance

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  • Azzam, Islam
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    Abstract

    Literature on the demutualization of stock exchanges has focused on social welfare and efficiency issues, whereas there is scarce empirical literature referring to the impact of a demutualization on the exchange financial performance. In addition, little is known about the factors that influence an exchange's decision to demutualize. Utilizing data on 11 out of 20 demutualized stock exchanges during the period 1996-2008, we find that: (1) demutualization increases an exchange's financial performance, size, and liquidity, while lowers its debt; (2) a stock exchange with relatively large size has relatively low profitability and high debt; (3) an exchange with relatively large size, low debt and high value of trade is more likely to demutualize. We conclude that stock exchange conversion from mutual to demutualized exchange is value enhancing for the exchange and its shareholders.

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    File URL: http://www.sciencedirect.com/science/article/pii/S1044-0283(10)00025-6
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    Article provided by Elsevier in its journal Global Finance Journal.

    Volume (Year): 21 (2010)
    Issue (Month): 2 ()
    Pages: 211-222

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    Handle: RePEc:eee:glofin:v:21:y:2010:i:2:p:211-222
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/620162

    Keywords: Demutualization Exchanges Panel data model Logistic regressions;

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    Cited by:

    1. Isaac Otchere & Sana Mohsni, 2016. "Changing organizational form in the stock exchange industry and risk-taking," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 30(4), pages 427-451, November.
    2. Maurizio Polato & Josanco Floreani & Andrea Paltrinieri & Flavio Pichler, 2016. "Religion, governance and performance: evidence from Islamic and conventional stock exchanges," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 20(3), pages 591-623, September.
    3. Giovanna Zanotti, 2012. "Demutualization and the Globalization of Stock Markets," Chapters,in: Handbook of Research on Stock Market Globalization, chapter 7 Edward Elgar Publishing.
    4. Faten Ben Slimane, 2012. "Stock exchange consolidation and return volatility," Managerial Finance, Emerald Group Publishing, vol. 38(6), pages 606-627, May.

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