Economic performance and corporate financial management of shipping firms

Abstract

In an increasingly competitive environment, the importance of the economic performance of the maritime sector has been emphasized in the research of the past two decades. Recently, shipping firms have increasingly entered stock markets as an alternative source of finance, avoiding thus excessive debt exposure. It is here considered necessary to use performance measures which combine shareholders' values with aspects of organizational management. Economic Value Added and Tobin's Q are used to evaluate the economics performance of shipping firms. Main elements of financial management are used to investigate the determinants of economic performance of shipping companies. 64 international shipping companies listed in Bloomberg Shipping Indices are included in our sample. A panel regression is used to examine the impact of financial strategies on performance, across three market segments. This analysis provides shipping companies with managerial and strategic insights on how financial options influence economic performance. We identify unique common performance-determining characteristics such as operational ones; profitability; and leverage ratio; among tanker, dry bulk and container shipping markets.