Title: Hedging effectiveness in shipping industry during financial crises

Authors: Aristeidis Samitas, Ioannis Tsakalos

Addresses: University of the Aegean, Business School, Department of Business Administration, 8 Michalon Str., Chios 82100, Greece. ' University of the Aegean, Business School, Department of Business Administration, 8 Michalon Str., Chios 82100, Greece

Abstract: This paper investigates the significance of financial derivatives in shipping firms and its potential impact on their firm value. The methodology applied in order to measure firms| value is Tobin|s Q. The investigation whether shipping firms can decrease their risk exposure and increase their value by using financial derivatives is considered to be essential. The sample of this study consists of shipping firms which are listed in US stock exchanges where the impact of financial crisis was first seen. The empirical evidence of this paper indicates that the use of derivatives minimise shipping firms| risk exposure and guarantee their growth.

Keywords: hedging effectiveness; financial crisis; risk management; bunker derivatives; freight forward agreements; FFAs; vessel value derivatives; shipping; risk exposure; financial derivatives.

DOI: 10.1504/IJFMD.2010.032469

International Journal of Financial Markets and Derivatives, 2010 Vol.1 No.2, pp.196 - 212

Published online: 03 Apr 2010 *

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