Comparative Analysis of Stock Returns Generated from Their Broad Index Performance and Liquidity as per Their Share Turnover Velocity: Pre and Post Demutualization

Research Journal of Finance and Accounting, Vol. 6, No.1, 2015, ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online).

14 Pages Posted: 6 Feb 2015

See all articles by Nawaz Ahmad

Nawaz Ahmad

RTS (Research, Trainings, and Solutions); Institute of Business Management (IoBM)

Atif Salman

Shaheed Zulfikar Ali Bhutto Institute of Science and Technology (SZABIST)

Jibran Qureshi

Greenwich University Karachi

Date Written: January 31, 2015

Abstract

The objective of this paper is to examine the impact of demutualization upon the performance of stock exchanges’ in terms of their liquidity as per the share turnover velocity and the returns that are generated from the broad indexes. The impact of demutualization has been examined upon a global basis, regional basis and amongst individual exchanges; the sample size is that of 3 stock exchanges from each region. The three regions from which the exchanges have been selected are the Americas, Asia Pacific and Europe. The model applied in this study was the matched-pair t-test to examine the pre and post demutualization levels of liquidity and returns generated. The results of this study show that demutualization increases the liquidity of the exchanges to a greater degree as compared to improving the returns of the exchanges. Therefore, the conclusions of this study are that demutualization is a not favorable for investors because demutualization does not increase the returns generated in an exchange; the increase in liquidity caused by demutualization makes it favorable for members of the exchange. However, this study does not take into consideration the global financial conditions while assessing the impact of demutualization upon a global scale.

Keywords: Demutualization, stock exchanges, liquidity, share turnover velocity, returns, broad indexes, Americas, Asia-Pacific, Europe, matched-pair t-test, global financial conditions.

JEL Classification: C10, C12, G14, O57

Suggested Citation

Ahmad, Nawaz and Salman, Atif and Qureshi, Jibran, Comparative Analysis of Stock Returns Generated from Their Broad Index Performance and Liquidity as per Their Share Turnover Velocity: Pre and Post Demutualization (January 31, 2015). Research Journal of Finance and Accounting, Vol. 6, No.1, 2015, ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online).. Available at SSRN: https://ssrn.com/abstract=2560294

Nawaz Ahmad (Contact Author)

RTS (Research, Trainings, and Solutions) ( email )

9th Nishat Lane, DHA 6
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Karachi, Sindh 75500
Pakistan
00923009292422 (Phone)

Institute of Business Management (IoBM) ( email )

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Karachi, Sindh 75190
Pakistan

HOME PAGE: http://www.faculty.iobm.edu.pk/staff/nawaz-ahmad/

Atif Salman

Shaheed Zulfikar Ali Bhutto Institute of Science and Technology (SZABIST) ( email )

90 and 100 Clifton
Karachi, ISLAMABAD 75600
Pakistan

Jibran Qureshi

Greenwich University Karachi ( email )

Karachi, Sindh
Pakistan

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