Title: Capital structure determinants of shipbuilding companies

Authors: Roar Adland; Joakim Noraas; Rikke S. Iversen

Addresses: Department of Economics, Norwegian School of Economics, Helleveien 30, 5045 Bergen, Norway ' Corporate Finance, Arctic Securities, Haakon VII's gt 5, P.O. Box 1833 Vika, NO-0123 Oslo, Norway ' Ernst & Young AS, P.O. Box 20, Oslo Atrium, NO-0051 Oslo, Norway

Abstract: The objective of this paper is to ascertain the major determinants of capital structure decisions for globally listed shipbuilding companies, and how quickly these companies adjust their capital structures when deviating from their target leverage ratios. Using a range of multiple regression models we find size, asset risk and the market-to-book ratio to be the most influential observable determinants of capital structure, though unobserved company-specific effects remain highly influential. Shipbuilders can be said to have relatively lower adjustment than deviation costs compared to other industries, as they tend to adjust their capital structures significantly faster.

Keywords: shipbuilding; capital structure; speed of adjustment.

DOI: 10.1504/IJSTL.2017.086941

International Journal of Shipping and Transport Logistics, 2017 Vol.9 No.6, pp.763 - 789

Received: 11 Sep 2015
Accepted: 21 May 2016

Published online: 10 Aug 2017 *

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