Derivatives listing strategy

Karathanassis, G., Sogiakas, V. and Toudas, K. (2012) Derivatives listing strategy. Journal of Financial Regulation and Compliance, 20(3), pp. 307-321. (doi: 10.1108/13581981211237990)

Abstract

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. In this paper, we investigate empirically the specific criteria that have governed the regulation process with respect to the derivative listing in the Athens Derivatives Exchange (ADEX).<p></p> 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.<p></p> Findings - According to our 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.<p></p> Originality/value - To the best of our knowledge the existing literature is confined to US markets and nothing has been done with respect to European Derivatives Markets. Our paper investigates the Greek case, the Athens Derivatives Exchange. In addition to the factors investigated by Mayhew and Mihov (2004) and Jennings and Starks (1986), we have extended our analysis to include such factors as creditworthiness and managerial characteristics of firms.<p></p>

• Item Type: Articles
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Sogiakas, Dr Vasilios
• Authors: Karathanassis, G., Sogiakas, V., and Toudas, K.
• College/School: College of Social Sciences > Adam Smith Business School
• Journal Name: Journal of Financial Regulation and Compliance
• ISSN: 1358-1988