Stock Exchange Merger and Liquidity
Speaker
Abstract
| In recent years stock exchanges have increasingly been forming alliances or merging with each other. The impacts of such merger activity are largely unknown and this paper is among the first to empirically investigate the effects of stock exchange consolidation. The paper investigates the effects of the Euronext stock exchange merger on listed firms, i.e. the merger of stock exchanges in Amsterdam, Brussels, Lisbon and Paris. Specifically, it examines how exchange consolidation has affected stock liquidity and how the effect varies with firm type, i.e. what types of firms benefit the most in terms of stock liquidity. Answering how liquidity has changed – and for which firms – is a valuable contribution to evaluating possible motives for stock exchange merger and whether a cross-border merger is advisable. The results show asymmetric liquidity gains from the Euronext merger, where the positive effects are concentrated among big firms and firms with foreign sales. There is not a significant increase in stock liquidity of small or medium sized firms, nor of firms that only operate domestically. The merger is associated with an increase in Euronext’s market share, where the increase is drawn from the London Stock Exchange. |
| Contact information: |
| Myra Lissenberg |
