Growth strategies and value creation: what works best for stock exchanges?

Iftekhar Hasan, Heiko Schmiedel and Liang Song

No 2/2010, Bank of Finland Research Discussion Papers from Bank of Finland

Abstract: In recent years, demutualized stock exchanges have increasingly engaged in M&A and alliance activities. To shed light on this topic, we investigate short-run share price responses to the formation of 110 stock exchange M&As and alliances in the period 2000 2008. Our ?ndings show that the average stock-price responses to a stock-exchange M&A or alliance is positive. Stock exchange M&As create more value than alliances. For alliances, joint ventures generate more value than non-equity alliances. More value is created when the integration is horizontal and cross-border than when it is vertical and domestic. Evidence is also found for learning-by-doing effects in stock exchange integration activities. Finally, we find that the better the shareholder protection, accounting standards and degree of capital market development in the partnering exchange s country, the higher the merger and alliance premium. These patterns also obtain when we examine long-run performance measures such as the three-year buy-and-hold abnormal return, change in ROA (ROE), change in liquidity, and change in market capitalization of IPO between years t-2 and t+2.

Date: 2010
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https://www.econstor.eu/bitstream/10419/212159/1/bof-rdp2010-002.pdf (application/pdf)

Related works:
Journal Article: Growth Strategies and Value Creation: What Works Best for Stock Exchanges? (2012)
Working Paper: Growth strategies and value creation: what works best for stock exchanges? (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofrdp:rdp2010_002

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