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Publication Corporate cash holdings in the shipping industry

Type

Working Paper

Institution(s)

University of Hamburg, Cass Business School

Year

2017

Author(s)

Meike Ahrends

Wolfgang Drobetz

Nikos Nomikos

Research Area

Ship Finance, Corporate Finance

Keywords

Maritime financial management, cash holdings, business cycle, growth opportunities

Abstract

We examine the corporate cash holdings of listed shipping companies and show that shipping firms hold more cash than similar firms in other asset-heavy industries. Higher cash holdings in the shipping industry are not attributable to firm- or country-level characteristics, but rather to the higher marginal value of cash. Shipping firms value an additional dollar of cash higher than matched manufacturing firms, regardless of their financial constraints status, but depending on their cultural background and the cyclicality of their expansion opportunities. Less procyclical shipping firms have a higher marginal value of cash, and this valuation effect is most pronounced in bad times of the business cycle when external capital supply tends to become scarce. Overall, it appears that shipping companies are more conservative than their peers in managing their cash positions.

Presentations

IFSPA 2017 (Hong Kong), IAME 2017 (Kyoto)

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