DP15291 Evading Corporate Responsibilities: Evidence from the Shipping Industry

Author(s): Guillaume Vuillemey
Publication Date: September 2020
Keyword(s): Corporate social responsibility, flags of convenience, Globalization, limited liability, shipping, subsidiary
JEL(s):
Programme Areas: Financial Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=15291

I show that the maritime shipping industry - handling above 80% of global trade flows - has evolved over the past decades to systematically evade "corporate responsibilities," i.e., compliance with regulatory standards and potential tort liabilities. Shipping firms increasingly dissociated legal and ultimate ownership, fragmented assets in one-ship subsidiaries, used flags of convenience, and evaded end-of-life responsibilities with "last-voyage flags." Microeconomic tests confirm that responsibility evasion, amidst global competition, is a dominant motive behind these patterns. These findings have implications for our understanding of corporate social responsibility, of extended forms of liability, and of the "dark side" of globalization.