Publication Type
Journal Article
Version
acceptedVersion
Publication Date
9-2003
Abstract
We show that organization structure of a stock exchange matters by utilizing the unique setting prevailing in India. India has two major stock markets, the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). These two exchanges adopt similar trading systems, trade essentially identical stocks, and follow the same trading hours. However, these exchanges have different organizational structures: BSE is mutualized whereas NSE is demutualized. Using the Hasbrouck [Review of Financial Studies 6 (1993) 191] measure of market quality we show that NSE provides a better quality market than BSE. This result is consistent with the work of Domowitz and Steil [Brookings-Wharton Papers on Financial Services, 1999], who proposed that demutualized exchanges are superior to mutualized in governance.
Keywords
stock exchange governance, demutualization, market quality, India, stock exchange, stock prices
Discipline
Finance and Financial Management | Portfolio and Security Analysis
Research Areas
Finance
Publication
Journal of Banking and Finance
Volume
27
Issue
9
First Page
1859
Last Page
1878
ISSN
0378-4266
Identifier
10.1016/s0378-4266(03)00105-5
Publisher
Elsevier
Citation
KRISHNAMURTI, Chandrasekhar; SEQUEIRA, John M.; and FU, Fangjian.
Stock Exchange Governance and Market Quality. (2003). Journal of Banking and Finance. 27, (9), 1859-1878.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/633
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1016/S0378-4266(03)00105-5