Online from: 1992
Subject Area: Accounting and Finance
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|Title:||Derivatives listing strategy|
|Author(s):||George Karathanasis, (Department of Business Administration, Athens University of Economics and Business, Athens, Greece), Vasilios Sogiakas, (Department of Economics, University of Glasgow, Glasgow, UK), Kenellos Toudas, (Department of Business Administration, University of Patras, Rio, Greece)|
|Citation:||George Karathanasis, Vasilios Sogiakas, Kenellos Toudas, (2012) "Derivatives listing strategy", Journal of Financial Regulation and Compliance, Vol. 20 Iss: 3, pp.307 - 321|
|Keywords:||Default probability, Derivative markets, Derivatives listing, Financial market regulation, Financial markets, Greece, Regulation|
|Article type:||Research paper|
|DOI:||10.1108/13581981211237990 (Permanent URL)|
|Publisher:||Emerald Group Publishing Limited|
|Acknowledgements:||JEL classification – C22, C52, C53, G15. The authors of the paper are grateful to the Editor of the Journal of Financial Regulation and Compliance and the referee for their useful comments.|
Purpose – Nowadays, a very interesting issue that matters both to academics and practitioners is the necessity and/or the usefulness of financial market regulation. This topic has many alternative dimensions, one of which concerns the derivative listing process. The main objective of the derivative's market regulatory authorities is the profitability of its members and the good performance of the exchange. The purpose of this paper is to investigate empirically the specific criteria that have governed the regulation process with respect to the derivative listing in the Athens Derivatives Exchange (ADEX).
Design/methodology/approach – The econometric part of the paper consists of two steps. The first step, deals with the estimation of the volatility, the default probability and the corporate governance provision index for each candidate firm. The second step consists of the utilization of a logit regression for the determination of the regressors and their significance in explaining which firms should be included into the derivatives and non-derivatives groups. This analysis is extended through a rolling window technique that captures the time varying characteristics of the estimated coefficients of the derivatives listing strategy implemented by the ADEX.
Findings – According to the empirical findings, the ADEX's regulatory authorities have considered mainly the corresponding firms' capitalization while the creditworthiness and the managerial characteristics of the candidates have been adopted only partially.
Originality/value – To the best of the authors' knowledge, the existing literature is confined to US markets and nothing has been done with respect to European Derivatives Markets. This paper investigates the Greek case, the Athens Derivatives Exchange. In addition to the factors investigated by Mayhew and Mihov and Jennings and Starks, the authors have extended their analysis to include such factors as creditworthiness and managerial characteristics of firms.
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