The probability of default and related party transactions. Evidence from internationally listed companies
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Abstract
The main purpose of this thesis is to examine the probability of default and related
party transactions. The business transactions between maritime shipping companies
listed on the stock exchanges and private companies, which are beneficially owned by
the controlling shareholder of the public maritime shipping companies, can be broken
down into two main types based on the nature of the business dealing, i.e., operating
RPTs and financing RPTs. A logit model was used for estimating the probability of
default of shipping company’s and related party transactions. The dataset used for the
analysis in this thesis contains fifty-five companies from the US SEC’s archival data
for the period 1993 to 2020, listed only maritime shipping companies on United States
of America stock exchanges, Nasdaq and NYSE. While this study has identified some
variables to be statistically significant, on the final model related party transactions
can’t show if affect the probability of default, isn’t statistically significant and they
cannot contribute substantial information to the probability of default.