Probability Modeling of Default for Shipping Companies

In the current study, using a logit model, a model for assessing the probability of shipping companies’ default has been developed. The data sample of the present paper included panel data on information on 192 shipping companies during the period 2001-2016. The developed model takes into account not only the financial performance of companies, but also non-financial variables and macroeconomic indicators. What is more, this study also found that some variables as return on assets, earnings before interest, income taxes, depreciation and amortization, the ratio of Tobin, return on equity, total assets, the Baltic Dry Index and gross domestic product have statistically significant effect on the probability of default for shipping companies. A distinctive feature of the current study is that in this paper, not only cases of defaults (bankruptcy and voluntary liquidation), but also cases of semi-defaults, which include, for example, mergers and acquisitions of shipping companies, are considered.