DEMUTUALIZATION OF STOCK EXCHANGES AND STOCK MARKET GROWTH: BROADER ECONOMIC INVESTIGATION OF DEMUTUALIZED EXCHANGES

Abstract

Stock exchanges are traditionally considered as “Brokers club” which inconsequence tarnishes the image of these markets in mind of the people. The advancement of the technology and media explosion have broader the wisdom of business in the field of the stock market. The demutualization is process where any shareholders become the member of company and receiving a mark able response in some countries of the world. The purpose of the study was to investigate whether demutualization lead to better stock market performance of the stock exchanges in all level of economies or for specific? Sample of the study was comprised of thirteen stock exchanges. The data of the study was collected from WFE website for each five years before and after the demutualization. Wilcoxon sign rank was used to evaluate the empirical data regarding the stock market growth of the stock exchanges after the demutualization. Wilcoxon sign rank test showed that stock exchanges are performing better in all level of economies after the demutualization in many dimension except in no of transactions in low level economies. The recommendations of the study are quite helpful for formulating policy of demutualization in Pakistan. The scope of the study can be extended to the other countries of the region and especially the developed countries where demutualization is being exercised.

References

1. Abou-Zied, K. (2005). Stock exchange demutualisation, public listing and performance,the case of the australian stock exchange. The university of new brunswick.
2. Aggarwal, R., & Dahiya, S. (2002). Demutualization and Public Offerings of Financial Exchanges. Georgetown
3. University: McDonough School of Business. Akhtar, s. (2002). Issues Involved in Stock Exchange Demutualization. In s. Akhtar, Demutualization of the stock exchanges (pp. 3-29). Manila, Philippines: Asian Development Bank.
4. Andrew M., C. (2002). An Introduction to Capital Markets, Products, Strategies,Participants. john wiley & sons.
5. Business Dictioanary.com. (2010, january 12). Retrieved August 29, 2013, from http://www.businessdictionary.com/definition/private-limited-company.html
6. DiMaggio, P. J. (1983). The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in
7. Organizational Fields. American Sociological Review , 48:147-160. Doidge, C. (2004). U.S. cross-listings andthe private benefits of control: evidence from dual-class firms. Journal of
8. Financial Economics , v 72, 519-553. Fama, E., & Jense, n. (1983). Separation of Ownership and Control. Journal of Law Econ 26 , pp 301–325.

9. Hodson, D. a. (2009). European perspective on the global financial crisis. Journal of Common Market Studies , Vol. 47, No. 5, pp. 939-53.
10. Isaac, O., & Erin, O. (2010). Can Commercialization Improve the Performance of Stock Exchanges Even Without
11. Corporatization? Canada: Sprott School of Business Carleton University. Joseph F, H. J., Willam C, B., Barry j, B., & Rolph E, A. (2012). Multivariate Data Analysis. New Dehli India: Pearson Education .
12. Morsy, A., & Rwegasira, K. (2010). Does Demutualization Matter to the Financial Performance of Stock
13. Exchanges? An Investigation of Demutualized Member Stock Exchanges of the World Federation of Exchanges. International Research Journal of Finance and Economics , v 40. Naacke, R. D. (2005). Cost and revenue survey . World federation fo the Exchanges .
14. Serifsoy, B., & Tyrell, M. (2005). Investment Behavior of Stock Exchanges and the Rationale for Demutualization
15. Theory and Empirical Evidence. Goethe University Frankfurt. Sofia, B. (2010). Why Do Stock Exchanges Demutualize and Go Public? Swiss Finance Institute Research Paper , N°06 – 10.
16. Tahir, A. Q., & Sial, A. W. (2013). Does Demutualization Enhance Financial Performance of Stock
17. Developing and Emerging Economies? Strategic Change: Briefings in Entrepreneurial Finance (Wiley&Sons), 22: 461–469. Exchanges in