Open AccessShareholder types, their concentration and its effects on demutualized exchanges’ operating and financial results - An empirical study
Author(s) -
Samer Iskandar
Publication year - 2014
Publication title -
corporate ownership and control
Language(s) - English
Resource type - Journals
eISSN - 1810-0368
pISSN - 1727-9232
DOI - 10.22495/cocv11i4p8
Subject(s) - shareholder , business , stock exchange , listing (finance) , order (exchange) , initial public offering , stock (firearms) , accounting , finance , monetary economics , economics , corporate governance , mechanical engineering , engineering
Scholars are divided over whether listing the shares of stock exchanges improves their financial performance. Applying simple OLS regressions, I test the hypothesis that exchanges’ post-IPO owners are value maximizers. However, recently demutualized exchanges have a high proportion of shareholders with conflicts of interest. Therefore, I also test whether different types of shareholders have different effects on performance. I find that investment managers behave like true value maximizers. The results also show that a higher fragmentation of share ownership is associated with lower performance. The proportion of brokers, who are the most conflicted shareholders in exchanges (since they are large customers as well as owners), is too small to have a measurable effect on performance. Most interestingly I find, by way of an inductive approach to shareholding structure, that strategic shareholders, a wide array of investors with various agendas, are on balance detrimental to shareholder value. This chapter is the first in a trilogy of articles that make up my Ph.D. dissertation. It is followed by an in-depth study of the shareholding structure of individual stock exchanges, notably in order to understand more clearly who these strategic investors are and what effects they have on exchanges.