Capital allocation and ownership concentration in the shipping industry
Malte Janzen and
Transportation Research Part E: Logistics and Transportation Review, 2019, vol. 122, issue C, 78-99
We measure the sensitivity of investment to changes in investment opportunities in the shipping industry, and test whether this relation is moderated by ownership concentration. For a sample of 126 globally listed shipping firms, we find that investment in commercial shipping follows freight rates, a measure of the potential income stream from owning a vessel. Ownership concentration, measured as the ownership stake of the largest shareholder, reinforces the positive effect of freight rates on investment, indicating a higher relative efficiency of capital allocation. The positive impact ownership has on the investment-freight rate sensitivity also translates into higher firm value. An analysis of investor identity shows that our results are driven by the group of firms where the largest owner is a financial investor, who is usually more focused on shareholder value maximization.
Keywords: Capital allocation; Investment; Ownership concentration; Firm value; Shipping firms (search for similar items in EconPapers)
JEL-codes: G01 G31 G32 L62 L91 (search for similar items in EconPapers)
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