Oil prices and accounting profits of oil and gas companies

Dayanandan, Ajit; Donker, Han

doi:10.1016/j.irfa.2011.05.004

Cited by 50 publications

(30 citation statements)

References 68 publications

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“…Sadorsky (2001) and Boyer and Filion (2007) find a positive significant relationship between oil price shocks stocks returns for Canadian oil and gas companies, El-Sharif et al (2005) report the same result for UK oil and gas companies as does Mohanty and Nandha (2011) for US oil and gas companies. Dayanandan and Donker (2011) report that oil price increases have a positive and statistically significant impact on the accounting profits of oil and gas companies in North America. Ramos and Veiga (2011) analyse the returns of the oil and gas sector in 34 countries and find that sector returns are significantly influenced by oil price returns.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Industries differ with how demand for their products might vary in response to oil price shocks, with regard to oil (and energy) intensity in production, and the energy sector (and dependent sectors) in particular has a boost to revenue with an increase in oil price that might well dominate other consequences of changes in oil price. A number of papers find a positive significant relationship between oil price shocks and stock returns for the oil and gas sectors in a number countries and worldwide (Sadorsky, 2001;El-Sharif et al, 2005;Boyer & Filion, 2007;Dayanandan & Donker, 2011;Mohanty & Nandha, 2011;Ramos & Veiga, 2011). Nandha and Brooks (2009) find that oil prices have a negative impact on returns in the transport sector in developed economies and insignificant effects in other countries.…”

Section: Literature Reviewmentioning

confidence: 99%

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Oil Price Shocks and Volatility in Australian Stock Returns

Ratti

Hasan

2013

Economic Record

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This paper examines the effect of oil shocks on return and volatility in the sectors of Australian stock market and finds significant effects for most sectors. For the overall market index, an increase in oil price return significantly reduces return, and an increase in oil price return volatility significantly reduces volatility. An advantage of looking at sector returns rather than a general index of stock returns is that sectors may well differ markedly in how they respond to oil price shocks. The energy and material sectors (as expected) and the financial sector (surprisingly) are out of step (in different ways) with results for the other sectors and for the overall index. A rise in oil price increases returns in the energy and material sectors and an increase in oil price return volatility reduces stock return volatility in the financial sector. Explanation for the negative (positive) association between oil return (oil return volatility) and returns (volatility of returns) in the financial sector must be based on the association via lending to and/or holdings of corporate bonds issued by firms with significant exposure to oil price fluctuations and their speculative positions in oil related instruments.JEL Classifications: G12, G15, Q4

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Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

Oil Price Shocks and Volatility in Australian Stock Returns

Ratti

Hasan

2013

Economic Record

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“…Research has been conducted examining the relationship between crude oil prices with various other factors. Dayanandan and Donker (2011) examined the relationship between commodity prices of crude oil, capital structure, firm size and accounting measures of firm performance using a sample of oil and gas firms in North America from 1990 to 2008. Their study found that crude oil prices had a positive and significant impact on accounting returns (Return on Equity) of oil and gas firms in North America.…”

Section: Impact Of Oil Price Movementsmentioning

confidence: 99%

Evidence on the Nature and Extent of Fall in Oil Prices on the Financial Performance of Listed Companies: A Ratio Analysis Case Study of the Insurance Sector in the Uae

Kishore¹,

Aslam²

2018

Proceedings of the 38th International Academic Conference, Prague

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The sharp decline in oil prices that started in 2014 affected most economies in the world either positively or negatively. United Arab Emirates has been striving to diversify away from oil and expects higher non-oil growth in 2018. This study involves calculations and comparisons of ratios pre and post the fall in oil prices in the insurance sector in the UAE. Parametric tests, conclude that while the change in profitability and efficiency ratios is statistically significant, the other ratios have been quite stable in the period. There has been an overall slowdown in the insurance industry yet UAE has been mostly resilient to the fall in oil prices and given the visionary leadership of its policy makers, the diversification strategy has taken effect rather quickly.

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“…Efforts have also been made to study the impact of changing oil prices on company's performance measured by increase/decrease in sales revenue, profit and return on assets etc. Dayanandan and Donker (2011) studied North American oil and gas companies for the period 1990 to 2008. They concluded that performance of oil and gas companies was negatively affected by 2008 financial crises.…”

Section: Hypothesismentioning

confidence: 99%

Impact of Oil Prices on Financial Performance of Corporate Firms : A Study of Omani Companies

Haq¹

2017

IJAR

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Recent decline in oil prices have affected the global economy in general but more specifically the economy of major oil exporting countries. Companies operating in this region have also felt the impact and consequently their various financial indicators have been effected. There is a need to study such an impact to help companies and regulators to better understand current economic scenario arising after volatile decline in oil prices. This study intends to analyse impact of oil prices on financial performance of companies in Sultanate of Oman. The key indicators used to evaluate the financial performance are revenue, profitability and earnings per share. Quantitative analysis has been conducted whereby data has been collected over four years which represent period of high and low oil prices. Data has been analysed by using correlation, scatter diagram and by conducting pair t test. It is found that companies' profitability and earnings per share has been severely affected by falling oil prices, which initially recorded decline in growth but now is showing negative growth.

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Oil prices and accounting profits of oil and gas companies

Cited by 50 publications

References 68 publications

Oil Price Shocks and Volatility in Australian Stock Returns

Oil Price Shocks and Volatility in Australian Stock Returns

Evidence on the Nature and Extent of Fall in Oil Prices on the Financial Performance of Listed Companies: A Ratio Analysis Case Study of the Insurance Sector in the Uae

Impact of Oil Prices on Financial Performance of Corporate Firms : A Study of Omani Companies

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