Abstract
Over the last two centuries, stock exchanges have emerged as a central component of the capitalist system. While stock exchanges are now widely accepted as legitimate economic actors, and share trading favoured as a legitimate investment vehicle, this has not always been the case. The process by which exchanges, as organisations, became socially accepted (or legitimate) has received minimal scholarly attention, particularly from a historical perspective. To this end, this study examines the organisational legitimacy of the Johannesburg Stock Exchange (JSE) from its establishment in 1887 until the end of World War II. Using both original archival material from the JSE Archive, and other published sources, the study shows that much of the Exchange’s early development can be understood as concurrent processes of legitimation. After its establishment, the Exchange’s legitimation occurred in four overlapping waves. First, it thrived despite a lack of legitimacy. Although market activity and Exchange membership increased rapidly, the Exchange was mostly seen as incompetent during this time. The Exchange did not yet function as a public institution, thus it only sought the approval of its members. Second, as public participation and government interest in the market increased, the Exchange extended its legitimation efforts beyond its members. This was achieved by increasing its control over Exchange members, as well as trading and listing procedures, to improve its competence as a market intermediary...
Ph.D. (Finance)