Solvency and Liquidity in Shipping Companies

This study examines factors affecting the solvency of shipping firms. The paper uses a panel dataset and employs the GLM and FGLS regression analyses. This study explores the financial structure of top 130 shipping firms provided by the Factiva database during the period between 2009 and 2013. The paper finds that liquidity is closely related to the leverage of shipping companies. The negative association between the asset liquidity and the leverage level implies that there exist conflicts of interest between managers and investors. Shipping firms have a comfortable high liquidity position, but they have a high degree of leverage. They need to take steps to reduce debts. There is evidence of heterogeneity in the determinants of leverage level. The paper also finds that the variables such as profitability, FSIZE, FAGE influence differently the leverage level whether the debt is short-term or long-term.