Abstract/Summary

This thesis provides the comprehensive understanding of investment, financing and mergers and acquisitions (M&As) in the shipping industry in three in-depth analyses. The first section of the thesis aims to document the evolution and the development in the shipping finance and investment literature by providing a comprehensive review of all existing research in the areas of (a) sources of finance and capital structure in shipping, (b) shipping investment and valuation, (c) corporate governance of shipping companies, and (d) risk measurement and management in shipping. For this purpose, a structured investigation of 137 papers published in 43 scholarly journals during the past four decades (1979-2017) has been performed. Bibliometric analysis shows that shipping finance and investment literature has expanded its scope since 1990s covering a variety of emerging research topics (including M&As), largely triggered by profound changes in business practice in the shipping industry, through interdisciplinary and international collaborations. In addition, content analysis highlights that findings in the shipping finance and investment literature provide valuable insights into characteristics in financial management of shipping companies in terms of highly leveraged capital structure, diversification of financing sources, investment decision, risk-return profile, value creation from M&As and gradual shift in corporate governance. Furthermore, the literature survey critically discusses research gaps, puzzling anomalies and under-explored areas providing promising directions of future research in this area. The second section of the thesis examines one of the most important angles of shipping investment documented in the review of the literature: inorganic investment. The aim is to draw the broad map of shipping M&A activity and to highlight the characteristics of this multi-faceted market using an extensive and global sample of 2,261 deals consummated by shipping companies during 1990-2014. Especially, considering drawbacks of classification in the extant shipping M&A research, all shipping M&A deals in the sample are partitioned into a new industrial segmentation reflecting actual business areas of acquiring and target firms. The results indicate that M&As play a key role in shaping the current shipping industry through both horizontal and vertical consolidation. The results also document the significance of cross-border deals as well as traditional European and emerging Asian initiatives in the shipping M&A market. In addition, the investigation of determinants of acquisition premium reveals that premium is negatively associated with the size and stock valuation of target firms. Furthermore, using the Tobit and the logit models, I analyse the choice of payment method in shipping M&As. The results show that the use of cash in shipping M&As is negatively associated with the deals size, but positively with acquirer size. Finally, as a follow-up to the second section, the third section of the thesis investigates the valuation effects of shipping M&As. The results suggest that both acquiring and target firms achieve positive shareholder returns, measured in 5-day Cumulative Abnormal Returns (CARs) around the announcement date, with statistical significance. The analysis also highlights several characteristics of value creation drivers in the shipping M&A market, such as, positive announcement returns in acquisitions of publicly listed targets and in stock-financed deals, outperformance of cross-border deals compared to domestic transactions, and the negative impact of the size of constituent firms. Overall, this thesis offers an extensive insight on investment, financing and M&A activity in the shipping industry from various perspectives ranging from the evolution of research contributions to empirical evidence on deal- and firm- characteristics and the value creation effect. The comprehensive synthesis of shipping finance and investment research findings offers invaluable information for understanding financial management in the shipping industry and shapes the future research topics in this area. Further, findings on shipping M&As based on the actual business areas of involved firms provide a comprehensive overview of the multi-faceted consolidation market that is largely driven by industry-specific factors.