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Determinants of Ship Management Revenues: The Case of Cyprus

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  • Nektarios A. Michail

    (Economic Analysis and Research Department, Central Bank of Cyprus, Nicosia 1076, Cyprus)

  • Konstantinos D. Melas

    (Faculty of Business and Economics, Metropolitan College, 54624 Thessaloniki, Greece
    Department of Economics, University of Western Macedonia, Fourka Area, 52100 Kastoria, Greece
    Department of Supply Chain Management, International Hellenic University, 57001 Thessaloniki, Greece)

  • Kyriaki G. Louca

    (Economic Analysis and Research Department, Central Bank of Cyprus, Nicosia 1076, Cyprus)

Abstract

We explore, for the first time in the literature, how the revenues of ship management companies respond to macroeconomic exogenous shocks. Using data for ship-management companies in Cyprus, we find evidence that a demand shock has the largest impact on revenues, exhibiting an almost one-for-one relationship. If the demand shock is permanent, we observe a ceteris paribus permanent effect on revenues. Similarly, this occurs irrespective of the final effect that demand has on the relevant freight rate, proxied via the Baltic dry and tanker (dirty and clean) indices. The BDI and the BDTI indices have a smaller effect on revenues, standing at approximately 0.05% for every 1% shock, while the clean tanker index does not have an effect, most likely due to their fleet composition. In accordance with the literature, we find that a shock in the price of Brent oil increases revenues. Our results bear importance not only for ship management companies per se, but also for countries that are ship management hubs.

Suggested Citation

  • Nektarios A. Michail & Konstantinos D. Melas & Kyriaki G. Louca, 2023. "Determinants of Ship Management Revenues: The Case of Cyprus," Economies, MDPI, vol. 11(7), pages 1-12, July.
    • Handle: RePEc:gam:jecomi:v:11:y:2023:i:7:p:184-:d:1188838
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    References listed on IDEAS

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    1. Alexandridis, George & Kavussanos, Manolis G. & Kim, Chi Y. & Tsouknidis, Dimitris A. & Visvikis, Ilias D., 2018. "A survey of shipping finance research: Setting the future research agenda," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 115(C), pages 164-212.
    2. Elizabeth R. DeSombre, 2006. "Flagging Standards: Globalization and Environmental, Safety, and Labor Regulations at Sea," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262541904, December.
    3. Sunil K. Mohanty & Roar Aadland & Sjur Westgaard & Stein Frydenberg & Hilde Lillienskiold & Cecilie Kristensen, 2021. "Modelling Stock Returns and Risk Management in the Shipping Industry," JRFM, MDPI, vol. 14(4), pages 1-25, April.
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