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Strategic change and corporate governance: Evidence from the stock exchange industry

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  • Ben Slimane, Faten
  • Padilla Angulo, Laura

Abstract

The literature suggests that demutualization improves financial performance, but most of these studies do not consider the corporate governance (CG) dimension to better understand this positive impact of demutualization. For a representative sample of global stock exchanges over a 21-year period, we examine the short and long term effects of demutualization on their financial performance. Unlike previous researchers, we also study whether the CG strategy of exchanges following demutualization affects their financial performance. Our major results indicate benefits from demutualization in the long term, and we find that improved performance is boosted by major restructuring in CG, when boards evolve to have fewer members but more specialized directors. Our results shed light on how demutualization strategy brings efficiencies by identifying attributes of corporate variables that explain how performance improved. This study provides guidance to exchanges considering demutualization. Results may also apply to firms facing major changes in their business environments.

Suggested Citation

  • Ben Slimane, Faten & Padilla Angulo, Laura, 2019. "Strategic change and corporate governance: Evidence from the stock exchange industry," Journal of Business Research, Elsevier, vol. 103(C), pages 206-218.
    • Handle: RePEc:eee:jbrese:v:103:y:2019:i:c:p:206-218
    DOI: 10.1016/j.jbusres.2018.10.045
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    More about this item

    Keywords

    Conversion to for-profit firm strategy; Stock exchanges; Performance; Corporate governance;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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