Title: How to manage the debt of shipping companies? A European analysis

Authors: Francesco Fasano; Maurizio La Rocca; Neha Neha

Addresses: Department of Business Administration and Law, University of Calabria, 87036 Rende (CS) Via Ponte P. Bucci 3C, Italy ' Department of Business Administration and Law, University of Calabria, 87036 Rende (CS) Via Ponte P. Bucci 3C, Italy ' Department of Business Administration and Law, University of Calabria, 87036 Rende (CS) Via Ponte P. Bucci 3C, Italy

Abstract: The present paper intends to empirically investigate for the first time the role of debt, a traditional and controversial topic in corporate finance, on firms' performance in the maritime industry. The aim is to discover whether the costs of debt, in terms of risk of distress and default, and agency problems, overcome the relative benefits (tax deductibility, managerial discipline and lower asymmetric information) or vice versa. The results interestingly show a negative effect of debt on corporate performance, evidencing that for maritime firms the costs of debt are higher than the potential benefits. Consequently, maritime firms should carefully consider their debt choices to keep financial flexibility, avoiding the risk of financial distress or even more bankruptcy.

Keywords: capital structure; corporate performance; firm value; maritime industry; maritime firms; shipping companies; debt; financial flexibility; managerial decisions.

DOI: 10.1504/IJSTL.2023.129868

International Journal of Shipping and Transport Logistics, 2023 Vol.16 No.3/4, pp.277 - 289

Received: 22 Oct 2020
Accepted: 26 Aug 2021
Published online: 03 Apr 2023 *

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