In recent years, demutualized stock exchanges have been
increasingly engaging in M&A and alliance activities. To
examine the effect of these growth strategies on
exchange shareholders’ value creation, we focus on 14
public stock exchanges and investigate their short-run
share price responses to the formation of 110 M&As and
alliances all over the world spanning the period
2000-2008. Our findings show that the average stock
price responses for M&As and alliances are positive.
M&As create more value than alliances. For alliances,
joint ventures generate more value than non-equity
alliances. More value accrues when the integration is
horizontal (cross-border) than when it is vertical
(domestic). Additionally, there is evidence of
learning-by-doing effects in stock exchange integration
activities. Finally, we find that the better the
shareholder protection, accounting standards and capital
market development in the partner exchange’s country,
the higher the merger and alliance premium for our
sample exchange. These patterns are consistent when we
examine the exchanges’ long-run performance. pdf 2010
