The Derivative Use of the Italian Listed non-Financial Firms: A Theoretical Perspective

We propose an analysis of the determinants of the use of derivatives for a sample of Italian non-financial companies. The results of an univariate and multivariate analysis suggest that different factors have a different impact on the use of derivatives. The probability of using derivatives is influenced by short-term factors (tax shields), long-term factors (agency costs, commodity risks) and permanent ones (financial distress, size, foreign and regulatory risks). Furthermore, the idea that derivatives show their positive effects with different intensity over time suggests that companies that do not use such instruments face managerial cognitive barriers that focus their economic expectations only on short-term horizons, maybe for a positive or negative excess of confidence. Moreover, the fact that diversification does not represent a determinant, unlike being a manufacturing or industrial enterprise and so potentially subjected to many regulations, suggests that ESG variables could contribute to explaining the use of derivatives.