Derivatives listing strategy
| Published date | 20 July 2012 |
| DOI | https://doi.org/10.1108/13581981211237990 |
| Pages | 307-321 |
| Date | 20 July 2012 |
| Author | George Karathanasis,Vasilios Sogiakas,Kenellos Toudas |
| Subject Matter | Accounting & finance |
Derivatives listing strategy
George Karathanasis
Department of Business Administration,
Athens University of Economics and Business, Athens, Greece
Vasilios Sogiakas
Department of Economics, University of Glasgow, Glasgow, UK, and
Kenellos Toudas
Department of Business Administration, University of Patras, Rio, Greece
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. 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 theirsignificance 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.
Keywords Derivativeslisting, Financial market regulation,Default probability, Greece,
Derivative markets,Financial markets, Regulation
Paper type Research paper
1. Introduction
It is a fact nowadays that derivative markets have penetrated the whole economic
environment, through standardized and non-standardized financial vehicles. Ma ny
researchers argue that derivative markets contribute to the price discovery process and
to the completeness of the corresponding spot markets, causing in most cases
stabilization effects. An important dimension of the structure of financial markets
The current issue and full text archive of this journal is available at
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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.
Derivatives
listing strategy
307
Journal of Financial Regulation and
Compliance
Vol. 20 No. 3, 2012
pp. 307-321
qEmerald Group Publishing Limited
1358-1988
DOI 10.1108/13581981211237990
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