The proxies conundrum

Rubeena Tashfeen (School of Business and Economics, University of Management and Technology, Lahore, Pakistan)
Tashfeen Mahmood Azhar (School of Business and Economics, University of Management and Technology, Lahore, Pakistan)

Management Research Review

ISSN: 2040-8269

Publication date: 16 April 2018



No systematic models are being used in empirical research that provide assurance for the choice of proxies that are being used. The purpose of this paper is to examine the validity of the proxies being used in empirical research, and as a case study, it focuses on the area of financial derivatives.


First, the authors review results of proxies from the financial derivatives literature and follow with empirical tests to confirm the findings from the review.


The review shows that proxies provide mixed results. The findings are further supported by the results from empirical tests. It suggests that measures used in the studies related to financial derivatives theory may need to be refined and highlights that no solid bases or tests have been developed for the proxies used to measure the constructs.

Research limitations/implications

As individual proxies are examined across studies, a meta-regression analysis cannot be used, and there is no other available model to capture this type of examination. The approach adopted has some limitations but provides a basis for examining the reasonableness of proxies as measures of constructs.


This is the first study that attempts to examine the strength of proxies in capturing related constructs. The methodology is unique to a review of past studies in financial derivatives. It supports the need for developing more rigorous models/bases for the measures being used, and this is an area that has been ignored in empirical research.



Tashfeen, R. and Azhar, T. (2018), "The proxies conundrum", Management Research Review, Vol. 41 No. 4, pp. 453-486.

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