Accessibility navigation


Corporate financial leverage and M&As choices: evidence from the shipping industry

Alexandridis, G., Antypas, N., Gulnur, A. and Visvikis, I. (2020) Corporate financial leverage and M&As choices: evidence from the shipping industry. Transportation Research Part E: Logistics and Transportation Review, 133. 101828. ISSN 1366-5545

[img] Text - Accepted Version
· Restricted to Repository staff only until 31 December 2020.
· Available under License Creative Commons Attribution Non-commercial No Derivatives.

731kB

It is advisable to refer to the publisher's version if you intend to cite from this work. See Guidance on citing.

To link to this item DOI: 10.1016/j.tre.2019.101828

Abstract/Summary

High capital intensity and reliance on debt financing are among the most prominent characteristics of the shipping industry. The corporate finance literature has documented that beyond a certain threshold, leverage can hamper a firm’s ability to raise capital, and as a result, have a bearing on its corporate investment policy. The new, more restrictive, financing landscape in the shipping sector has put the management of capital structure on the spotlight as a key driver of investment policy, financial health, and thus, firm success. In this paper, we examine for the first time the link between the financing policy of shipping companies and their corporate investment decisions. We focus on the impact of deviations from target capital structure on mergers and acquisitions (M&A); an increasingly important corporate growth vehicle for shipping companies, with directly measurable outcomes. Deviations from optimal leverage display a strong association with the likelihood to consummate acquisitions, deal size, the financing method as well as the M&A outcome. Higher debt levels are shown to have a negative effect on acquisitiveness and a positive effect on the quality of corporate investment; a pattern with direct policy implications for shipping companies, their management teams, and shareholders.

Item Type:Article
Refereed:Yes
Divisions:Henley Business School > ICMA Centre
ID Code:88152
Publisher:Elsevier

University Staff: Request a correction | Centaur Editors: Update this record

Page navigation