Can Commercialization Improve the Performance of Stock Exchanges Even Without Corporatization?
Carleton University - Eric Sprott School of Business
Isaac K. Otchere
Carleton University - Sprott School of Business; Carleton University - Sprott School of Business
January 7, 2011
Financial Review, Vol. 46, Issue 1, pp. 67-87, 2011
We examine the performance of mutual, demutualized, and publicly listed exchanges and find evidence of improved performance along the exchange governance continuum, with publicly traded exchanges exhibiting better operating performance than demutualized exchanges. However, our robustness test, focusing on the corporatized exchanges that have gone through the three phases of the governance structure, shows that the listed exchanges do not exhibit evidence of incremental gains in efficiency and profitability beyond what they achieved at the demutualization phase. We conclude that commercialization provides sufficient freedom for exchanges to exploit monopoly rents before going public, while corporatization brings about proper valuation of the exchanges franchise.
Number of Pages in PDF File: 21
Keywords: stock exchanges, demutualization, corporatization, self-listing, operating performance
JEL Classification: G15, G32, L2Accepted Paper Series
Date posted: January 10, 2011
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