The impact of oil price volatility on firm financial and market performance : an empirical analysis from oil exporting countries

Abstract

This thesis examines the relationship between oil price volatility and firms' financial performance and market value. The thesis uses a sample of non-financial firms listed in six Gulf Cooperation Council (GCC) markets between 2005 and 2016. The findings of the thesis reveal that the oil price volatility has a significant negative relationship with firms' performance, including financial performance and market value. The findings also show that the impact of oil price volatility on the industrials and petrochemical industries is not significant. This indicates that in the GCC countries, the impact of oil price volatility affects the overall economic activity, and therefore there is no difference between oil-related industries and other industries. Moreover, the results show that the impact of oil price volatility is heterogeneous among the GCC countries. Finally, the results show that the firm's characteristics have a significant impact on the relationship between oil price volatility and performance. More specifically, mature firms are less affected by oil price volatility than other firms. In addition, the oil price volatility affects shariah-compliant firms more than other firms. The thesis uses several tests to assure the robustness of the findings. First, t-tests and median rank tests are used. Subsequently, multivariate analysis of the dependent and independent variables while considering other factors that affect the firm's performance is performed. The findings are robust after using several model specifications, including ordinary least squares (OLS), OLS with year and industry fixed effects, and dynamic System Generalised Method of Moments (System-GMM).

Date of Award	2021
Original language	English