Please use this identifier to cite or link to this item: https://doi.org/10.1016/S0378-4266(03)00105-5
Title: Stock exchange governance and market quality
Authors: Krishnamurti, C.
Sequeira, J.M. 
Fangjian, F.
Keywords: Demutualization
Market quality
Stock exchange governance
Issue Date: 2003
Citation: Krishnamurti, C., Sequeira, J.M., Fangjian, F. (2003). Stock exchange governance and market quality. Journal of Banking and Finance 27 (9) : 1859-1878. ScholarBank@NUS Repository. https://doi.org/10.1016/S0378-4266(03)00105-5
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. © 2003 Elsevier B.V. All rights reserved.
Source Title: Journal of Banking and Finance
URI: http://scholarbank.nus.edu.sg/handle/10635/44503
ISSN: 03784266
DOI: 10.1016/S0378-4266(03)00105-5
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