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Restructuring the Board: How Stock Exchanges Can Succeed as For-Profit Firms

Listed author(s):
  • Faten Ben Slimane

    ()

    (UPE - Université Paris-Est , IRG - Institut de Recherche en Gestion - UPEM - Université Paris-Est Marne-la-Vallée - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12)

  • Laura Padilla Angulo

    ()

    (Loyola University Andalucía)

Registered author(s):

    We conduct a field experiment using stock exchanges, many of which were forced to demutualize and convert to for-profit structures due to increased competition and technological advances, to study corporate governance restructuring measures to adapt to new market conditions. The financial performance of the stock exchanges we studied significantly improved after their conversion to for-profit organizations and provide an example of successful corporate governance restructuring. We find that the stock exchanges restructured board composition and refocused them to create better value. The exchanges also reorganized their management teams and increased their performance-related compensation. Results suggest that the conversion of a company to a for-profit structure brings efficiencies when accompanied by changes in the governing bodies and the incentive structures. We also find that converting to for-profit firms had a positive impact on the reputation of the exchanges. The positive impact was even greater when accompanied by changes in board composition. Our results are relevant not only to the financial industry but to firms in other sectors considering going public.

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    Paper provided by HAL in its series Post-Print with number hal-01583860.

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    Date of creation: Jun 2017
    Publication status: Published in AFFI Conference, Jun 2017, Valence, France.
    Handle: RePEc:hal:journl:hal-01583860
    Note: View the original document on HAL open archive server: https://hal-upec-upem.archives-ouvertes.fr/hal-01583860
    Contact details of provider: Web page: https://hal.archives-ouvertes.fr/

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