Abstract
We build a comprehensive panel data on demutualization and other market design aspects of financial exchanges in 115 countries. We find that in the competitive exchange industry, product based growth opportunities (e.g., derivatives) and additional capital from demutualization are essential to outweigh potential technological disintermediation. Our second hypothesis focuses on the impact of demutualization on the welfare of its external stakeholders. We find that the cost of capital for listed firms is lower after demutualization. The number of listed firms is higher after demutualization creating additional investment opportunities for investors. Demutualization is also associated with an improved secondary market liquidity.
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