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Consolidation in the Exchange Industry: What are Exchanges Actually Worth? Some Evidence from a Crises Environment

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  • Maurizio Polato
  • Josanco Floreani

Abstract

It is generally acknowledged that the exchange industry shares the typical features of network industries, forcing exchanges to merge across countries. This process was first urged by the need to keep up with technological developments and increased competition from peers and new competitors. Starting 2005 and up to 2007 we observed significant cross border mergers within the securities industry leading to the creation of a few large groups with a diversified business model. It was questioned whether such mergers leaded to a stable equilibrium. Now, in the aftermath of the crisis a new wave of consolidation is taking place. The financial turmoil dramatically affected the market functioning delivering severe strains to the financial sector and modified the way of conducting business. We address the implications of the crisis on exchange’s values, investigating if expectations lying behind values have somewhat changed or compressed or reflect new opportunities. Copyright Springer-Verlag Wien 2012

Suggested Citation

  • Maurizio Polato & Josanco Floreani, 2012. "Consolidation in the Exchange Industry: What are Exchanges Actually Worth? Some Evidence from a Crises Environment," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 19(2), pages 195-203, November.
    • Handle: RePEc:spr:trstrv:v:19:y:2012:i:2:p:195-203
    DOI: 10.1007/s11300-012-0241-7
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    References listed on IDEAS

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    More about this item

    Keywords

    Stock exchanges; Mergers; Value; Liquidity; Cost synergies; Network economics; G21; G32; G34; G38;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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