Title: Does ownership structure matter in explaining derivatives' use policy in French listed firms

Authors: Sabri Boubaker, Salma Mefteh, Junaid M. Shaikh

Addresses: DEFI, ESSEC Tunis, 4, Rue Abou Zakaria El Hafsi – 1089, Montfleury – Tunis, Tunisia; IHEC Sousse, Route Hzamia Sahloul 3 – BP No. 40 – 4054 Sousse, Tunisia; Institut de Recherche en Gestion, Universite Paris Est, 61, Avenue du General de Gaulle, 94010 Creteil Cedex, France. ' ESSCA Business School, Paris-Dauphine University, 1 Rue Lakanal, 49003 Angers, France. ' Department of Accounting, School of Business, Curtin University of Technology, Sarawak Campus (Off Shore Campus), CDT 250, 98009 Miri, Sarawak, Malaysia

Abstract: The purpose of this study is to investigate the effect of ownership structure on derivatives| use policy. Using data for 262 French non-financial listed firms, the results show that the two decisions of whether to use derivatives or not and the extent of derivatives use are not affected by the same variables. CEO ownership has a negative effect on the decision to use derivatives, whereas CEO tenure length influences negatively the extent of derivative use. CEO age impacts positively both decisions, whereas firms that grant stock options to their CEOs do not rely too much on derivatives. However, the presence of outside blockholders seems not to affect the firms| hedging policy.

Keywords: derivatives; derivative use; corporate governance; CEO ownership; France; ownership structure; French listed firms; CEO tenure length; CEO age; stock options; hedging policy.

DOI: 10.1504/IJMFA.2010.033291

International Journal of Managerial and Financial Accounting, 2010 Vol.2 No.2, pp.196 - 212

Published online: 20 May 2010 *

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