Could mergers become more sustainable? A study of the stock exchange mergers of NASDAQ and OMX

Xie, Wenjing, Paulo Vieito, João ORCID logoORCID: https://orcid.org/0000-0002-0899-4930, Clark, Ephraim and Wong, Wing-Keung ORCID logoORCID: https://orcid.org/0000-0001-6755-572X (2020) Could mergers become more sustainable? A study of the stock exchange mergers of NASDAQ and OMX. Sustainability, 12 (20) , e8581. ISSN 2071-1050 [Article] (Published online first) (doi:10.3390/su12208581)

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Abstract

This study investigates whether the merger of NASDAQ and OMX could reduce the portfolio diversification possibilities for stock market investors and whether it is necessary to implement national policies and international treaties for the sustainable development of financial markets. Our study is very important because some players in the stock markets have not yet realized that stock exchanges, during the last decades, have moved from government-owned or mutually-owned organizations to private companies, and, with several mergers having occurred, the market is tending gradually to behave like a monopoly. From our analysis, we conclude that increased volatility and reduced diversification opportunities are the results of an increase in the long-run comovement between each pair of indices in Nordic and Baltic stock markets (Denmark, Sweden, Finland, Estonia, Latvia, and Lithuania) and NASDAQ after the merger. We also find that the merger tends to improve the error-correction mechanism for NASDAQ so that it Granger-causes OMX, but OMX loses predictive power on NASDAQ after the merger. We conclude that the merger of NASDAQ and OMX reduces the diversification possibilities for stock market investors and our findings provide evidence to support the argument that it is important to implement national policies and international treaties for the sustainable development of financial markets.

Item Type: Article
Additional Information: This article belongs to the Special Issue Behavioral Business and Behavioral Financial Economics with Applications
Keywords (uncontrolled): Stock exchange mergers, cointegration, Nordic and Baltic stock exchanges
Research Areas: A. > Business School > Accounting and Finance
Item ID: 31196
Notes on copyright: © 2020 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license.
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Depositing User: Jisc Publications Router
Date Deposited: 19 Oct 2020 16:26
Last Modified: 09 Feb 2022 10:39
URI: https://eprints.mdx.ac.uk/id/eprint/31196

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