Valuation mismatch and shipping q indicator for shipping asset management

Sinem Celik Girgin, Thanasis Karlis and Okan Duru

Maritime Policy & Management, 2020, vol. 47, issue 1, 109-126

Abstract: This paper aims to develop an adaptation of the Tobin Q investment model for the shipping asset management in order to monitor valuation mismatch and bubble pricing of shipping assets. In this circumstance, the market prices of various shipping assets (e.g., Capesize or Panamax dry bulk carriers in different age profiles) are compared to the measured long-term asset value with second-hand ship prices. The mark-to-market prices of shipping assets are led by current market trends and freight rates, while the long-term asset value is estimated by using past data under certain assumptions (mean reversion, trend reversion). The discrepancy between market prices and the long-term nominal value of a shipping asset reflects any mispricing, which in turn sheds light on investment timing and market entry-exit decision.

Date: 2020
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DOI: 10.1080/03088839.2019.1675196

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