اهرم مالی شرکت و انتخابات ادغام ها و اکتساب ها
Abstract
1- Introduction
2- Related literature and hypotheses development
3- Data and empirical methodology
4- Empirical results
5- Robustness tests
6- Conclusion
Appendix A.
References
Abstract
High capital intensity and reliance on debt financing are among the most prominent characteristics of the shipping industry. The corporate finance literature has documented that beyond a certain threshold, leverage can hamper a firm’s ability to raise capital, and as a result, have a bearing on its corporate investment policy. The new, more restrictive, financing landscape in the shipping sector has put the management of capital structure on the spotlight as a key driver of investment policy, financial health, and thus, firm success. In this paper, we examine for the first time the link between the financing policy of shipping companies and their corporate investment decisions. We focus on the impact of deviations from target capital structure on mergers and acquisitions (M&A); an increasingly important corporate growth vehicle for shipping companies, with directly measurable outcomes. Deviations from optimal leverage display a strong association with the likelihood to consummate acquisitions, deal size, the financing method as well as the M&A outcome. Higher debt levels are shown to have a negative effect on acquisitiveness and a positive effect on the quality of corporate investment; a pattern with direct policy implications for shipping companies, their management teams, and shareholders.
Introduction
The shipping industry is one of the most capital-intensive. Shipping companies’ CAPEX-to-Assets ratio averaged around 8% between 1990 and 2018, placing the sector among the top 8th percentile of all sectors.2 In deep-sea freight transportation, capital investments are almost exclusively associated with vessel purchases, which are in turn financed with debt at more than 40% of capital employed for the average firm (Drobetz et al., 2013). The idiosyncratic characteristics of the shipping industry including the high asset tangibility and equity risk environment, have naturally led to more debt-driven capital structures. More recently, the sector has reached critical levels of borrowing with the world’s top 40 banks having a $345bil exposure to the shipping industry (Petrofin, 2018), and an estimate of $150bil of loans provided by European banks alone considered distressed (Reuters, 2017).3 The high capital ntensity and reliance on debt financing associated with shipping companies, coupled with the financial constraints brought forward by the new financing environment, suggest that the success of a shipping company is highly sensitive to its debt policy since deviations from target capital structures can lead to a high cost of financial distress (Drobetz et al., 2013). The corporate finance literature has provided ample evidence that a high degree of leverage in a firm’s capital structure can hamper its ability to raise more capital (Hovakimian et al., 2001; Fama and French, 2002; Flannery and Rangan, 2006) and, as a result, limit its flexibility in devising corporate investment policy (Harford et al., 2009; Uysal, 2011; DeAngelo et al., 2011). The impact of financial leverage on corporate investment policy can be more pronounced in the shipping industry due to its idiosyncrasies, making it a natural laboratory to study the effects financing policy on corporate investment.