Corporate governance – demutualization of stock exchanges: an analysis of its benefits

• Autor(a) principal: Sá, Jaime Contreras de Passos Homem de
• Data de Publicação: 2009
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10071/1702
• topic: Competition; Demutualization; Value-enhancement; Performance; Concorrência; Desmutualização; Valor; Desempenho

The stock exchange reality of today is very different to that one our ancestors experienced. Today, due to a variety of reasons, such as competitive pressures, stock exchanges are no longer structured as cooperative venues. Instead, today, trading venues are for-profit enterprises, whose capital is detained by external ownership. This new structure is a result of demutualization. Demutualization consists of the introduction of a residual claimant into the exchange – which maximizes the venues’ value. Furthermore, demutualization is aligned with a structure change, which brings into the exchange a governing board and a separation of ownership and membership rights. Due to an exponential growth of this structure change in the mid 1990s, I was intrigued and, consequently, analysed the benefits of demutualization. Through an analysis of four distinct exchanges: two from Europe, one from North America and one from Asia, I objectively analyse a set of financial and volume indicators, and the evolution of ownership. Through this analysis, I conclude that demutualization is valueenhancing, in the sense that revenues increase, costs become efficient, and the overall performances of the sample exchanges seemingly improve. Moreover, I conclude that competitive pressures tend to reduce the volumes of listed companies in the exchange and, given demutualization, the trend is reversed. Through the analyses of the structure of ownership, I positively correlate the growth of the shareholder base to improved performances. Lastly, I link demutualization with mergers and acquisitions.