Shipping companies listed on New Yorks Stock Exchange

Shipping companies listed on New Yorks Stock tackThis study was based on 21 transportation companies listed in New York Stock supersede, over the period of 2005 to 2009. On the control board below the selected expatriation companies argon shown.Shipping Companies listed in the New York Stock ExchangeDIANA enchantPING INCNAVIOS MARITIME HOLDINGS INC3 safe BULKERS INC4GENCO chargePING TRADING particular(a)5TEEKAY CORPORATION6TSAKOS ENERGY NAVIGATION LIMITED7EXCEL MARITIME CARRIERS LTD8DANAOS CORPORATION9AEGEAN MARINE PETROLEUM entanglement incorporation10FRONTLINE LIMITED11SEACOR HOLDINGS INCORPORATED12NORDIC TANKERS13GLOBAL SHIP LEASE INCORPORATION14GENERAL MARITIME CORPORATION15SEASPAN CORPORATION16SHIP FINANCE INTERNATIONAL LIMITED17KIRBY CORPORATION18OVERSEAS SHIPHOLDING GROUP, INC19DHT MARITIME INCORPORATION20INTERNATIONAL SHIPHOLDING CORPORATION21TIDEWATER INCThis paper seeks to examine the relationship among iii corporate brass mechanisms ( panel objet dart, chief e xecutive status and canvass deputation) and more or less upstanding accomplishment measures ( descend on investing capital, return on rightfulness, Return on As effects and Current Ratio). Also, the essay examines the relationship among these three corporate administration mechanisms and the direct murder (Net Sales to Operating Cost) of the corporations.Part 1Corporate GovernanceCorporate organisation is the set of processes, customs, policies, laws, and institutions affecting the way a corporation (or fellowship) is directed, administered or controlled with the objective to enhance sh beholders wealth. Corporate governance as healthful includes the relationships among the stakeholders involved and the inclinations by which the corporation is governed.It is supposed that better corporate governance leads to better corporate performance by preventing the expropriation of controlling sh arholders and ensuring better decision-making. Corporate governance is a priority a long with pecuniary indicators when evaluating enthronisation decisions according to investors. The majority of them ar prepared to pay a premium for companies having high governance standards. On the opposite, at that place are also bad forms of corporate governance that lead corporations to problems. Good corporate governance is considered to be a fundamental necessity to run a steady successfully. besides corporate governance is a process which piece of ass ensure growth for a firm and the economy in general. approximately of the selected shipping companies are foreign private issuers established in Marshal or Bermuda islands. The minority of the selected companies are U.S corporations. hence most(prenominal) of them are not required to comply with the corporate governance practices followed by U.S. companies sideline the New York Stock Exchange (big board) listing standards. However, they are required to state any signifi arouset differences amidst their corporate gov ernance practices and the practices required by the NYSE according to Section 303.A.11 of the NYSE Listed Company Manual. furthermore almost e actually chosen shipping company adopts NYSE required practices, such as having a majority of unaffiliated directors, establishing visit and compensation and nominating citizens committees as well as adopting a Code of Ethics.NYSE requires companies to adopt and disclose corporate governance guidelines. The guidelines should address to the director qualification standards, the director responsibilities, the director rag to forethought and in pendent advisers, the director compensation, the director orientation and move education, counselling succession as well as an one-year performance evaluation. However, most of the shipping companies trade in NYSE are not obliged to comply with these rules due to that they are foreign private issuers as well as most of them are offshore. For these companies there is no obligation of complying with any corporate governance guidelines or code of ethics. Shareholders can be intercommunicate via the annual reports and Code of Ethics, both of which have been publicly filed by the United States Securities and Exchange Commission available on the companies web-sites. Corporate governance guidelines and shipping companies intend to publish an overview of the Companys guiding principles which focuses on sociable issues. This Code cannot cover every applicable law or provide answers to all questions that whitethorn arise but it can set out general principles about an organization belief on matters such as mission, quality, conflicts of interest, inner reporting, privacy or the environment. Furthermore, it may define proper procedures to determine whether a violation of the code of ethics has occurred.Code of ethics and corporate social responsibility is a ignored issue in the shipping effort. Traditionally there is no reason for the shipping companies to invest in advertising or in any other activity that could improve their image. Consequently the main goal of the management of a shipping company is to attract as many as possible bleak clients. Any characteristic that can improve the reputation of the company is not a priority for the managers of a shipping company. Many years have passed and shipping companies were not obliged to follow roughly rules of social responsibilities. Fortunately, the last decade various regulations have been imposed to the operation of a shipping company, although the control mechanisms were not always efficient.Board of DirectorsAn important aspect that influences the corporate governance is the board of directors. The board of directors plays an important theatrical role to the company operation. It oversees top management and is entrusted with the responsibility of observe and supervising the company resources and operation. Moreover, it nethertakes the obligation of appointing a qualified person as the main(prenominal) E xecutive Officer and other management staff. in that respectfore, the board is seen as a aggroup of individuals with fiduciary responsibilities of leading and directing a firm, with the primary objective of protecting the shareholders interests with high star of integrity and commitment to the firm.The role of the Board is square in designing efficient corporate monitoring and ratification mechanisms. With respect to reducing agency costs at the Board level, Boards of directors have three underlying decision rights (1) Monitoring (2) Ratification (3) Reward and punishment rights. They may even remove top managers from their positions and self-assurance them for their decisions. NYSE rules require the size of the board of directors not to be smaller than three members. As it can be observed by the survey the size of the board of directors of the hear is between five and septette members. Although there are some shipping companies that have more than seven members in the board and some others that have less than five members.It can be concluded that the majority of the board members in the board of directors are impertinent directors (member of a company board of directors who is not an employee or stakeholder in the company). The role of in restricted directors on the board of directors is to effectively monitor and control firm activities in reducing opportunistic managerial behaviors and expropriation of firm resources. The majority of the board members are outsiders for most of the companies some of them use relatives as well as acquaintances as board members. This indicates a tendency for the shipping companies to be governed by a closed team of people. In accordance to NYSE rules the board should have examine, compensation, and nominating committees do up entirely by outside directors. Almost all of them are consisted by the three obligatory committees opposed to the majority of the selected shipping companies that do not have the obligation to comply with the NYSE rules. The role of these committees is satisfying they are assigned to tax the boardThe role of the Audit CommitteeThe purpose of the Audit Committee is toMonitor the integrity of the firm financial statements.Monitor the qualifications, independence and performance of the company in strung-out auditors.Monitor the performance of the company internal audit function.The audit committee ensures that the books of the company are not fake and that shareholders are properly informed of the financial status of the firm.In this essay it is made an effort to examine the importance of the audit committee in shipping companies listed in the New York Stock Exchange. NYSE requires from a listed U.S. company to have an audit committee with a minimum of three members. But it is permitted by Rule 10A-3 under the Securities Exchange mould of 1934 that audit committees of foreign companies can have less than three independent members in the audit committee.The fountainhead Executive Officer ( chief executive officer) StatusThe Chief Executive Officer position and the whole management team is an important position to hold in a corporation. They are responsible forOperating the firm in an effective way.Preparing the annual direct plans and budgets.Establishing an effective system of internal control.In this essay it is examined the role of the Chief executive officer (CEO) in the shipping companies. There are two types of leadership structure i.e. feature leadership structure and offendd structure. Combined leadership structure happens when the CEO is also the chairman of the board. On the other hand separated leadership structure takes place when the Chairman of the board is a various person from the CEO. Many studies identifying the implications of CEO duality exist. It is thought that the run performance may be amend as a result of less debate among the CEO and chairman and/or other directors. From the sample of the shipping companies that it w as taken a world-shattering tendency cannot be provided. In some of the shipping companies the CEO is also the chairman of the board while in others is not.Part 2 modeologyThe bespeak of this inquiry is to figure out if the corporate governance mechanisms have an effect on firm performance. Therefore, the measurement of firm performance is primarily comprised of two factors operating and financial performance.The information employ for this research were extracted from the audited financial statements of 21 shipping companies listed in the New York Stock Exchange. The survey covers the time period through 2005 2009. The sample consists of the annual observations for the board size of every company, for the CEO status and for the size of the audit committee of every shipping company. The aim of the research is to find if these corporate governance mechanisms influence the operating and financial performance ratios. Consequently regression models have been constructed in graze to prove the association between the corporation governance in operating and financial performance.Microsoft Excel and the statistical package Eviews were used so as to collect the data run the appropriate regressions and identify the results. Moreover except from the companies annual reports a lot of information was extracted through the Thomson Database. In the end panel data methodology was adopted because it combined time series and thwart sectional data. The method of analysis is that of multiple regressions and the method of estimation is Ordinary Least Squares (OLS).By tally the appropriate regressions via Eviews and by using Return on equity and the profit margin as the dependent inconsistents, the results were considered inadequate. Consequently it was considered integral to proceed to further research. That is why the below financial ratios were used as dependent versatiles.For the financial performanceReturn on equity ratio Profitability ratio, it can indicate the management say-soReturn on assets ratio Profitability ratio, it can also indicate the management effectivenessReturn on investment capital ratio Profitability ratio, it can also indicate the management effectivenessCurrent ratio liquidityratioFinally in order to measure the operating performanceThe above formulas contributed on calculating the ratios of the shipping companies for the time period of 2005 2009. Moreover, many independent variables were used to define the most accurate and specifically those that would give some results.Consequently as independent variables are defined the aboveOut_Board = the proportion of the independent directors over the total directors.CEO = if the same person occupies the pose of the chairman of the board and the Chief executive is defined by valuing with zero, otherwise value with one.Audcom1 = the proportion of the audit committee.In the end in order to run the regression, the economic models should be defined.For the return on equityFor the return on assetsFor the return on investment capitalFor the current ratioSo as to measure the operating performance of the shipping companies the above economic model was used.Furthermore the above parameters should be defined.oConstant term1Coefficient of the regression2 Coefficient of the regression3 Coefficient of the regressioneit frill termEmpirical Results and DiscussionIt is important to mention some important data before continuing to comment on the rigs of the regression. First of all the regression outputs will be tested for all the three confidence intervals 90%,95% and 99%. In order to have a statistical significant output the t statistic has to be greater than 1.64, 1.96 and 2.576 respectively. Moreover so as to have a statistically significant variable the p value has to be less than 0,1 , 0.05 and 0.01 respectively.As it can be observed from the table below, the three independent variables are statistically insignificant because the t statistics are lower than t he critical values. Moreover it can be confirmed because all the p values are greater than the level of significance. myrmecophilous variable ROEMethod gore Least Squares sum of money panel (unbalanced) observations 99VariableCoefficientStd. defectt-StatisticProb.OUT_BOARD-0.006830.552604-0.012360.9902CEO0.0174370.170980.1019820.919AUDCOM1-0.0027960.101423-0.0275710.9781C0.186610.5296410.3523340.7254R-squared0.000114 familiarized R-squared-0.031461F-statistic0.003613Prob(F-statistic)0.999698S.E. of regression0.791347Dependent Variable ROAMethod panel Least SquaresTotal panel (unbalanced) observations 99VariableCoefficientStd. Errort-StatisticProb.OUT_BOARD-0.0957210.061678-1.5519560.124CEO-0.0322320.019084-1.6889720.0945AUDCOM10.0093890.011320.8293870.409C0.1400990.0591152.3699540.0198R-squared0.078318familiarised R-squared0.049212F-statistic2.690791Prob(F-statistic)0.050602S.E. of regression0.088325Dependent Variable ROAMethod Panel Least SquaresTotal panel (unbalanced) observ ations 99VariableCoefficientStd. Errort-StatisticProb.OUT_BOARD-0.1045520.060653-1.7237730.088CEO-0.0284250.018493-1.5370330.1276C0.1713870.0454393.7718070.0003R-squared0.071644Adjusted R-squared0.052303F-statistic3.704289Prob(F-statistic)0.028204S.E. of regression0.088181It is evident from the tables above that there is a correlation between return on assets and the independent variables. On the first table it can be observed that the CEO independent variable is statistically significant on 10% confidence interval. Also R- Squared is 7.16% of the variability of the return on assets and is explained by the regression. On the second table one independent variable is excluded from the regression in order to prove that the proportion of the outside directors over the total number of the board is also statistically significant at the 90% confidence interval.It is evident that these two variables influence the financial performance of the shipping companies that are selected in the sampl e.On the table below it is shown the regression output between the return on investment capital and the independent variables. It can be observed that the proportion of the outside directors and the CEO are statistically significant on the 90% confidence interval. It implies that the majority of the sampled firms, in the period under study, have separate persons occupying the posts of chief executive and the board chair.Dependent Variable ROICTotal panel (unbalanced) observations 97Method Panel Least SquaresVariableCoefficientStd. Errort-StatisticProb.OUT_BOARD-0.1087580.062348-1.7443670.0844CEO-0.0318690.019189-1.6607410.1001AUDCOM10.005420.0113770.4764050.6349C0.1994760.0593413.3615320.0011R-squared0.081182Adjusted R-squared0.051542F-statistic2.738981Prob(F-statistic)0.047783S.E. of regression0.088251Dependent Variable CURRENT_RATIOMethod Panel Least SquaresTotal panel (unbalanced) observations 99VariableCoefficientStd. Errort-StatisticOUT_BOARD0.5548211.4987860.37018CEO-0.6365880 .463736-1.372737AUDCOM10.5385690.2750821.95785C0.9541221.4365040.664197R-squared0.047648Adjusted R-squared0.017574F-statistic1.584356Prob(F-statistic)0.198271S.E. of regression2.146311Another ratio so as to observe the financial performance of a company is the current ratio. By running a regression it can be concluded that the audit committee size is statistically significant at a 90% and 95% confidence interval. Because of the different financial performance ratio it can be observed a different correlation between the dependent and the independent variable. On the particular output the positive relationship between the liquidity ratio and the audit committee seems to be a very reasonable result. Shipping companies follow the corporate governance guidelines which are given by the NYSE for the audit committees.In the end a regression was run for the operating performance of the shipping companies. On the table below it is shown that the proportion of the outside directors is statisti cally significant at 90% confidence interval with t statistic greater than the critical values. Also it is shown that the audit committee variable is also statistically significant for all the confidence intervals. But the R squared of the output is very low which means that only the 8.76% of the variability of the dependent variable is explained.Dependent Variable OPER_PERFMethod Panel Least SquaresTotal panel (unbalanced) observations 99VariableCoefficientStd. Errort-StatisticProb.OUT_BOARD-0.9515850.50254-1.8935520.0613CEO0.0836540.155490.5380050.5918AUDCOM1-0.238750.092234-2.5885140.0112C3.1097290.4816576.4563210R-squared0.087671Adjusted R-squared0.05886F-statistic3.043024Prob(F-statistic)0.032629S.E. of regression0.719653Descriptive statisticsThe table below presents the result of the descriptive statistics analysis between the dependent variables and the independent variables by measuring the mean, the standard deviation and the percentage of distribution range of the pooled years of the sample under study.Descriptive StatisticsOper_PerfRoaRoeRoicCur_ratioOut_BoardCEOAUDCOM1Mean1.7418540.0782020.181830.116033.2431120.7622110.4747472.808081Median1.5271390.0720550.1564490.1101341.861320.77777803Maximum5.4098940.5131773.845730.36896670.57955115Minimum0.889839-0.42841-4.60062-0.412850.14060.42857101Std. Dev.0.7377460.0905810.7791850.090457.1007460.1530310.5019030.816623Skewness1.867152-0.45139-1.94635-1.542548.614659-0.206590.1011390.250996Kurtosis8.23328916.3264724.7683514.1785781.75662.0852151.0102293.44567Jarque-Bera177.3846735.94032017.183549.119227351.864.15611216.500431.858795Probabil.000000.1251730.0002610.394791Sum179.4117.74199318.0011911.3709327.554375.4588947278Sum Sq. D.55.515390.80409159.498670.7935795042.062.29502124.6868765.35354Observ.103999998101999999As it can be referred from the table above the number of the observations is all close to the hundred. This is because some of the data were not available and could not be extracted from the financial reports. Moreover another reason of the lack of some data is that some of the shipping companies were listed in the New York Stock Exchange after 2005.ConclusionThe aim of this essay was to prove that there is a relationship between corporate governance mechanisms and firm performance using a sample of 21 shipping companies which are listed in the New York Stock Exchange from 2005 until 2009. The study used firm performance ratios and three mechanisms to prove the above relationship. Panel data methodology is employed the method of analysis is multiple regressions and the method of estimation is Ordinary Least Squares. The study concludes to the followingsThere is no significant relationship between ROE and none of the independent variables.There is a significant relationship among ROA and CEO status and the proportion of the outside directors.There is significant relationship among ROIC, board composition and CEO status.There is a significant relationship between Current ratio and audit committee.And there is a significant relationship among operating performance, board composition and audit committee.Concerning future research, efforts should be made to increase the sample size and the corporate governance variables to achieve a clearer view about the essence of the corporate governance mechanisms on the shipping companies. It can be said that shipping industry has been grow all over the world from family to family. It is a closed industry which excludes many people. Consequently the nature of the industry makes it very difficult to perform an in depth research and establish an outcome.ReferencesWeb Siteshttp//www.investopedia.com/http//en.wikipedia.orghttp//www.dianashippinginc.comHome varlet