Economic policy uncertainty, oil price shocks and corporate investment: Evidence from the oil industry

Ilyas, Muhammad; Khan, Aamir; Nadeem, Muhammad; Suleman, Muhammad Tahir

doi:10.1016/j.eneco.2021.105193

Cited by 67 publications

(15 citation statements)

References 49 publications

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“…They also found that the asymmetric influence on crude oil and natural gas producers is more potent. Ilyas et al ( 2021 ) combines oil price uncertainty with the current research hotspot, the economic policy uncertainty, and found that both above negatively impact corporate investment. More specifically, the negative effect is more pronounced in oil-producing countries.…”

Section: Literature Review and Hypothesismentioning

confidence: 99%

Crude oil price uncertainty and corporate carbon emissions

Wei

Ren

et al. 2021

Environ Sci Pollut Res

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Low-carbon transformation has become a key priority in China, as demonstrated in the implementation of the Carbon Peak, Carbon Neutralization policy, leading to increasing concern of environmental performance at the corporate level. This paper measures the carbon emission of 1,089 Chinese companies through the EIO-LCA-based approach. Then we examine the impacts of international crude oil price fluctuations and the corporate development level on carbon emissions of individual companies. Our results indicate that an increase in international crude oil price uncertainty could inhibit the company’s carbon emission. In parallel, we find that there might exist an environmental Kuznets curve (EKC) inverted U-shaped correlation between the company’s development level and its environmental performance. However, some exceptions to corporate carbon performance may emerge, resulting from specific corporate characteristics such as the state-owned nature and whether the firm is listed on the stock exchange. Our results could help companies optimize their internal carbon emission structure during the low-carbon transition process and contribute to effective policy regulations towards the target of carbon reduction.

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Section: Literature Review and Hypothesismentioning

confidence: 99%

Crude oil price uncertainty and corporate carbon emissions

Wei

Ren

et al. 2021

Environ Sci Pollut Res

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“…In this connection, one stream of research focuses on the effect of EPU on corporate investment decisions (Kang et al., 2014; Wang et al. , 2014; Gulen and Ion, 2016; Xie et al., 2019; Phan et al., 2019; Ilyas et al., 2021). These studies generally conclude that firms respond to high EPU by postponing their investment, thus, exercising the “option to wait” to cope with the uncertainty.…”

Section: Introductionmentioning

confidence: 99%

Economic policy uncertainty and firm propensity to invest in corporate social responsibility

Ilyas

Mian

Suleman

2022

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PurposeThis study aims to examine the impact of economic policy uncertainty (EPU) on firm investment in corporate social responsibility (CSR)’s environmental, social and governance (ESG) dimensions. Additionally, the study examines whether firm size moderates the EPU–CSR relationship.Design/methodology/approachThe sample includes 2,017 US. firms from 2002 to 2018. Data on ESG scores are drawn from the Asset-4 database in Thomson Reuters to measure CSR investment. ordinary least square regression, including fixed effects at the year and industry level, is used as the main econometric specification. Moreover, the study employed the two-step system Generalized Method of Moments to address the endogeneity concerns.FindingsThe findings reveal that firms increase their CSR investment in response to high EPU. The results are consistent in all the three ESG/CSR dimensions: ESG. Moreover, the positive association between EPU and CSR is driven by firm size, indicating that large-sized firms have the resources and incentives to invest more in CSR. Our main findings remain consistent after addressing the endogeneity concerns and controlling for the effect of omitted variable biasness.Originality/valueUsing a unique sample of US firms, this study empirically contributes to the current literature on the association between EPU and CSR investment. Moreover, firm size plays a vital role in moderating this relationship.

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“…Economicand-environmental policy fluctuations, whether domestic or foreign, may reduce foreign direct investment (Hsieh et al 2019, Zhang andColak 2022). The negative impact of this uncertainty on investment is also evident in sustainable development areas such as energy (Ilyas et al 2021) and ecology (Song et al 2021). Further, EPU reduces the allocative efficiency of the market economy (Guedhami et al 2022).…”

Section: Environmental Impact Of Epumentioning

confidence: 99%

Prediction of Post-COVID-19 economic and environmental policy and recovery based on recurrent neural network and long short-term memory network

Xiong²,

Chen³

et al. 2022

Environ. Res. Commun.

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COVID-19 has brought significant impacts on the global economy and environment. The Global Economic-and-environmental Policy Uncertainty (GEPU) index is a critical indicator to measure the uncertainty of global economic policies. Its prediction provides evidence for the good prospect of global economic and environmental policy and recovery. This is the first study using the monthly data of GEPU from January 1997 to January 2022 to predict the GEPU index after the COVID-19 pandemic. Both Recurrent Neural Network (RNN) and Long Short-Term Memory (LSTM) models have been adopted to predict the GEPU. In general, the RNN outperforms the LSTM networks, and most results suggest that the GEPU index will remain stable or decline in the coming year. A few results point to the possibility of a short-term increase in GEPU, but still far from its two peaks during the first year of the COVID-19 pandemic. This forecast confirms that the impact of the epidemic on global economic and environmental policy will continue to wane. Lower economic and environmental policy uncertainty facilitates global economic and environmental recovery. Economic recovery brings more opportunities and a stable macroeconomic environment, which is a positive sign for both investors and businesses. Meanwhile, for the ecological environment, the declining GEPU index marks a gradual reduction in the direct impact of policy uncertainty on sustainable development, but the indirect environmental impact of uncertainty may remain in the long run. Our prediction also provides a reference for subsequent policy formulation and related research.

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Economic policy uncertainty, oil price shocks and corporate investment: Evidence from the oil industry

Cited by 67 publications

References 49 publications

Crude oil price uncertainty and corporate carbon emissions

Crude oil price uncertainty and corporate carbon emissions

Economic policy uncertainty and firm propensity to invest in corporate social responsibility

Prediction of Post-COVID-19 economic and environmental policy and recovery based on recurrent neural network and long short-term memory network

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