Does management compensation affect the usage of financial derivatives? A study on non-financial firms listed on the Oslo stock exchange

Abstract

The purpose of this master thesis is to examine how management compensation affects the usage of financial derivatives. The study focused on non-financial firms listed on the Oslo Stock Exchange with the data collected manually from annual reports for the year 2011. We find evidence that the ownership of stocks options by CEOs of those companies has a significant negative effect on the usage of financial derivatives. We also tested whether the ownership of shares by CEOs or bonus payments received by CEOs affect the use of financial derivative. Although the results were not robust, we observed a positive relation between these variables and the usage of financial derivatives.