Please use this identifier to cite or link to this item: https://www.um.edu.mt/library/oar/handle/123456789/19191
| Title: | Misuse of derivatives : considerations for internal control |
| Authors: | Grima, Simon Bezzina, Frank Romānova, Inna |
| Keywords: | Derivative securities -- Case studies Corporate culture Corporations -- Finance -- Management |
| Issue Date: | 2016 |
| Publisher: | Emerald Group Publishing Limited |
| Citation: | Grima, S., Bezzina, F., & Romanova, I. (2016), Misuse of derivatives : considerations for internal control. In S. Grima, F. Bezzina, I. Romānova, Ramona Rupeika- Apoga (ed.), Contemporary Issues in Finance: Current Challenges from Across Europe (Contemporary Studies in Economic and Financial Analysis, Volume 98), pp.49 – 62. Emerald Group Publishing Limited. |
| Abstract: | Derivatives are nowadays widely used globally both for speculative andhedging purposes. However, as experience shows, inadequate use of derivativesmay cause severe problems and even bankruptcy of firms. Thus, itis essential to help organizations design a robust proactive governanceand internal control structure, which will help to prevent new financialdebacles and scandals when using derivatives. Taking into account thefrequent use and the growing fraud caused by derivatives, the aim of thepaper is to identify considerations for internal control important toensure better governance of firms using derivatives. The main findingsare based on an analysis of interviews that were conducted with expertsdirectly or indirectly involved with derivatives from different Europeancountries. The interviews were semistructured following the approachproposed by Patton (1990). An analysis of the data collected from theinterviews was carried out using a thematic approach. The paper identifiesand analyzes the main “sources” of derivatives misuse, includingpoor design and mis-categorization of instruments, convenience to blamederivatives, unsophisticated players, insufficient regulatory environment,poorly designed internal controls, inadequate communication, poor firmculture, etc. It also provides an extensive analysis of the main recommendationfor internal control concerning awareness of derivatives design,the human aspects, regulations, communication, knowledge, and training.Sound internal controls could avoid new debacles without adding otherrestrictions to the market. Moreover, it provides recommendations forinternal control important to ensure better governance of firms usingderivatives. |
| URI: | https://www.um.edu.mt/library/oar//handle/123456789/19191 |
| ISSN: | 10.1108/S1569-375920160000098004 |
| Appears in Collections: | Scholarly Works - FacEMAIns Scholarly Works - FacEMAMAn |
Files in This Item:
| File | Description | Size | Format | |
|---|---|---|---|---|
| Chapter - Misuse of Derivatives Considerations for Internal Control.pdf | 134.21 kB | Adobe PDF | View/Open |
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