Understanding the cost of capital of logistics service providers: an empirical investigation of multiple contingency variables

Abstract

The article analyzes the influence of company-, industry-and market-related variables on the cost of capital of logistics service providers, as well as on their systematic risk. Financial information has become more and more important in strategic decision making (especially in the international context); in addition of being a measure of performance, the cost of capital is an important variable for logistics service providers in decisions about investing capital and developing the appropriate strategy. In total, financial data on over 700 logistics service providers for a period of 10 years were analyzed applying multiple regression analysis. Our results show that the logistics service industry is rather nonvolatile from an investor's viewpoint. Microeconomic variables significantly influence the cost of capital of logistics service providers, whereas systematic risk is influenced by macroeconomic variables. In both cases, significance is strongly dependent on the services offered and financial structure of the companies, although the headquarters location is irrelevant. Main implication of our study underlines the specific interdependencies of strategic decision making and cost of capital of logistics service providers. As recent research made only little efforts in linking the fields of business logistics and corporate finance, we follow a broad research approach to give a first comprehensive overview on this interdisciplinary topic.

Leveraging Financial Management Performance of the Spanish Aerospace Manufacturing Value Chain

“…"ROE" is prevalent in the literature in the form of net income to equity (Shue et al 2009;Ciampi, Gordini 2008;Tehrani et al 2012;Madrid-Guijarro et al 2011;Lampe, Hofmann 2014;Devinney et al 2010). This research adopts the same formula.…”

“…The model employs "Asset intensity" as found in the literature (Hofmann, Lampe 2013;Lampe, Hofmann 2014). The same is the case for "Assets turnover rate" (Hofmann, Lampe 2013;Delen et al 2013;Shue et al 2009;Tehrani et al 2012;Halici, Umut The literature reviewed uses the calculation debt divided by equity for "Debt-to-equity" (Hofmann, Lampe 2013;Ciampi, Gordini 2008;Lampe, Hofmann 2014) and we do the same for our research model. For "Leverage", a number of slightly different approaches are found.…”

Retailer driven supply chain with limited transportation capacities and supply demand market index

“…Collaboration with customers is vital for the business process success. LSP's have to take strategic decisions to achieve business objectives (Fugate et al, 2008;Lampe and Hofmann, 2014;Aldaihani and Darwish, 2014).…”