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Comparative Analysis of Stock Returns Generated from Their Broad Index Performance and Liquidity as per Their Share Turnover Velocity: Pre and Post Demutualization


The objective of this paper is to examine the impact of demutualization upon the performance of stock exchanges’ in terms of their liquidity as per the share turnover velocity and the returns that are generated from the broad indexes. The impact of demutualization has been examined upon a global basis, regional basis and amongst individual exchanges; the sample size is that of 3 stock exchanges from each region. The three regions from which the exchanges have been selected are the Americas, Asia Pacific and Europe. The model applied in this study was the matched-pair t-test to examine the pre and post demutualization levels of liquidity and returns generated. The results of this study show that demutualization increases the liquidity of the exchanges to a greater degree as compared to improving the returns of the exchanges. Therefore, the conclusions of this study are that demutualization is a not favorable for investors because demutualization does not increase the returns generated in an exchange; the increase in liquidity caused by demutualization makes it favorable for members of the exchange. However, this study does not take into consideration the global financial conditions while assessing the impact of demutualization upon a global scale. Keywords: Demutualization, stock exchanges, liquidity, share turnover velocity, returns, broad indexes, Americas, Asia-Pacific, Europe, matched-pair t-test, global financial conditions

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International Institute for Science, Technology and Education (IISTE): E-Journals

Last time updated on 30/10/2019

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