Stock exchange merger and liquidity: The case of Euronext

Ulf Nielsson*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

52 Citations (Scopus)


The paper empirically investigates the effects of the Euronext stock exchange merger on listed firms, i.e. the merger of stock exchanges in Amsterdam, Brussels, Lisbon and Paris. Specifically, it examines how exchange consolidation has affected stock liquidity and how the effect varies with firm type, i.e. what types of firms benefit the most in terms of stock liquidity and other financial outcomes. The results show asymmetric liquidity gains from the stock exchange merger, where the positive effects are concentrated among big firms and firms with foreign sales. There is not a significant increase in stock liquidity of small or medium sized firms, nor of firms that only operate domestically. Beyond the significant size and foreign exposure effects (i.e. big firms and firms with foreign sales gain), the analysis finds no systematic pattern in the distribution of merger benefits across industries or listing locations. The merger is associated with an increase in Euronext's market share, where the increase is drawn from the London Stock Exchange. There is however no evidence of Euronext enhancing its competitive stand in terms of attracting new firm listings.

Original languageEnglish
Pages (from-to)229-267
Number of pages39
JournalJournal of Financial Markets
Issue number2
Publication statusPublished - May 2009

Bibliographical note

Funding Information:
Primary thanks to Ailsa Röell for numerous discussions and useful insights. I am also grateful to Pierre-André Chiappori, Lawrence Glosten, Charles Jones, Richard T. Meier, Albert Menkveld, Catherine Thomas, Eric Verhoogen and an anonymous referee for valuable comments and conversations. I also benefitted from useful comments from participants at seminars at Columbia University, Kansas State University, University of Iceland and the European Commission and thanks to participants in seminars at Reykjavik University and the EEA Annual Congress in Milan. Also thanks to Kathleen M. Dreyer, Rafael Plata and Euronext Statistics for data assistance and to Columbia University for financial support from the CIBER, Wueller and Vickrey research funds. An earlier version of this paper also received the Joseph de la Vega prize 2007, awarded by the Federation of European Securities Exchanges. All remaining errors are my own.

Other keywords

  • Integration
  • Liquidity
  • Merger
  • Stock exchange


Dive into the research topics of 'Stock exchange merger and liquidity: The case of Euronext'. Together they form a unique fingerprint.

Cite this