Download This PaperThe Limits of Coase: A Study of Financial Distress in the Shipping Industry
67 Pages Posted: 7 Dec 2016 Last revised: 26 Apr 2024
Date Written: May 1, 2017
Abstract
The shipping industry provides a unique laboratory for examining the limits of Coase for resolving financial distress since the industry is largely detached from sovereign bankruptcy procedures. We find that private contracts and institutions have evolved to resolve coordination failures: for example, we find a low incidence of vessel seizures, ports that compete to enforce creditor rights, and small fire sale discounts. However, we report significant spillovers of financial distress for other stakeholders, particularly environmental, who bear the costs of under maintained vessels, including oil spills, and abandonment of derelict ships, which end up in toxic breaker yards.
Keywords: ESG, Oil Spills, Bankruptcy, Freedom of Contracting, Fire Sales
JEL Classification: G33, L33, G23
Suggested Citation: Suggested Citation
European Corporate Governance Institute (ECGI)
c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium
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Oren Sussman
European Corporate Governance Institute (ECGI) ( email )
c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium
European Corporate Governance Institute (ECGI) ( email )
c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium