This paper studies why earnings-growth volatility in shipping markets changes over time and what future information this change implies. To make this idea precise, we use the present-value identity of earnings growth and analyze Panamax and Capesize markets for empirical studies. We find that a large part of unexpected earnings growth is attributed to news about future returns. This finding implies that when operating profits are unexpectedly higher than expected, we could anticipate that vessel-price volatility increases so that vessel prices move toward operating profits. Our work contributes to the deep understanding about how shipping markets behave especially on the second-moment implications.

JEL Classifications: C10, C32, R4.
Keywords: Shipping market; Present value; Variance decomposition, Volatility