Abstract
We examine the corporate cash holdings of listed shipping companies. Shipping firms hold more cash than similar firms in other asset-heavy industries. Higher cash holdings in the shipping industry are not attributable to firm- or country-level characteristics, but rather to the higher marginal value of cash. Shipping firms value an additional dollar of cash higher than matched manufacturing firms, regardless of their financial constraints status, but depending on their cultural background and the cyclicality of their expansion opportunities. Less procyclical shipping firms have a higher marginal value of cash, and this valuation effect is most pronounced in bad times of the business cycle when external capital supply tends to become scarce. Overall, it appears that shipping companies are more conservative than their peers in managing their cash positions.
Highlights
Cash holdings and other liquid assets have always been important for the strategic decisions of shipping companies
We examine the corporate cash holdings of listed shipping companies and show that shipping firms hold more cash than similar firms in other asset-heavy industries
Motivated by the specific features that characterize companies operating in the shipping sector, in this study we extend the empirical evidence on corporate cash holdings by looking at the case of shipping companies
Summary
Cash holdings and other liquid assets have always been important for the strategic decisions of shipping companies. Shipping firms hoard more cash than their manufacturing matches in almost every year of our sample period, their average cash holdings being almost three times higher.
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