A Study of the NYSE-Euronext Merger Open Access

Moore, Jessica Lydia (2012)

Permanent URL: https://etd.library.emory.edu/concern/etds/f7623d42b?locale=en
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Abstract

Access to stock markets greatly affects a company's ability to grow and be productive in any
market place. Until recently, however, stock exchanges were not analyzed as firms competing
and producing goods in their own market. The budding discussion became even more
complicated as exchanges began engaging in mergers, in an attempt to increase profitability. We
conduct an empirical analysis of the effects of one of these mergers on the stocks traded on the
exchanges involved, and the marketplaces in which the exchanges compete. Our results show
that stocks on both exchanges experienced lower liquidity during the time of the merger's
announcement. They also indicate that stocks traded on the New York Stock Exchange (NYSE)
experienced higher liquidity during the time of the merger, whereas stocks traded on Euronext
saw lower liquidity. Moreover, we show that while the market shares of both participating
exchanges increased, the level of market concentration remained relatively stable. Such stability
of market concentration comes from both the statistic's previously high levels and tradeoffs
between the market shares of the dominant exchanges. Our study adds to a growing body of
research regarding transatlantic exchange mergers, which we predict will become increasingly
common in the near future. Ours is one of the first to conduct an empirical analysis of a merger
of this variety. We hope it will contribute to future research and policymaking regarding the
appropriate mechanisms for regulating exchange merger.

Table of Contents


Introduction 1

Background 2

Literature Review 5

Empirical Strategy 10

Results 14

Discussion 21

Conclusion 25

Appendix 28

Bibliography 50

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