Identifying shipowners’ risk attitudes over gains and losses: Evidence from the dry bulk freight market

Maria Giamouzi; Nikos K. Nomikos

doi:10.1016/j.tre.2020.102129

Identifying shipowners’ risk attitudes over gains and losses: Evidence from the dry bulk freight market

Maria Giamouzi, Nikos K. Nomikos

Department of Economics

City, University of London

Research output: Contribution to journal › Article › peer-review

3 Citations (SciVal)

Abstract

This study examines the risk-return trade-off in the dry bulk freight market under different scenarios such as risk measures, risk attitudes and controlling for variables associated with the freight rate cycle. For long-term contracts, there exists a negative association between risk and return, suggesting that shipowners are willing to offer a discount on time-charter rates over spot rates to compensate for the loss of flexibility. Additionally, shipowners are not uniformly risk averse, as finance theory suggests, since their utility functions are concave (risk-averse) for losses and convex (risk-seeking) for gains.

Original language	English
Article number	102129
Journal	Transportation Research Part E: Logistics and Transportation Review
Volume	145
Early online date	10 Dec 2020
DOIs	https://doi.org/10.1016/j.tre.2020.102129
Publication status	Published - 31 Jan 2021

Bibliographical note

Funding Information:
The authors would like to thank the Co-Editor in Chief (Professor Qiang Meng), the Associate Guest Editor (Professor Manolis Kavussanos), three anonymous reviewers, and also participants of the International Association of Maritime Economists (IAME) Conference, Athens, Greece, 2019 for their constructive comments and suggestions. This research was partly conducted when the first author was a Research Fellow at the London School of Economics.

Publisher Copyright:
© 2020 Elsevier Ltd

Copyright:
Copyright 2020 Elsevier B.V., All rights reserved.

Funding

The authors would like to thank the Co-Editor in Chief (Professor Qiang Meng), the Associate Guest Editor (Professor Manolis Kavussanos), three anonymous reviewers, and also participants of the International Association of Maritime Economists (IAME) Conference, Athens, Greece, 2019 for their constructive comments and suggestions. This research was partly conducted when the first author was a Research Fellow at the London School of Economics.

Keywords

Dry Bulk freight market
Prospect Theory
Risk preferences
Risk-Return relationship
Utility functions

ASJC Scopus subject areas

Business and International Management
Civil and Structural Engineering
Transportation

Access to Document

10.1016/j.tre.2020.102129

Cite this

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title = "Identifying shipowners{\textquoteright} risk attitudes over gains and losses: Evidence from the dry bulk freight market",

abstract = "This study examines the risk-return trade-off in the dry bulk freight market under different scenarios such as risk measures, risk attitudes and controlling for variables associated with the freight rate cycle. For long-term contracts, there exists a negative association between risk and return, suggesting that shipowners are willing to offer a discount on time-charter rates over spot rates to compensate for the loss of flexibility. Additionally, shipowners are not uniformly risk averse, as finance theory suggests, since their utility functions are concave (risk-averse) for losses and convex (risk-seeking) for gains.",

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Identifying shipowners’ risk attitudes over gains and losses: Evidence from the dry bulk freight market

Abstract

Bibliographical note

Funding

Keywords

ASJC Scopus subject areas

Access to Document

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