AbstractPurpose – Nowadays, a very

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 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.
Keywords Derivatives listing, Financial market regulation, Default probability, Greece,
Derivative markets, Financial markets, Regulation
Paper type Research paper