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International oil price uncertainty and corporate investment: Evidence from China's emerging and transition economy

Author

Listed:
  • Wang, Yong
  • Xiang, Erwei
  • Cheung, Adrian (Wai Kong)
  • Ruan, Wenjuan
  • Hu, Wei

Abstract

We develop and estimate a dynamic model of investment to investigate the impact of international oil price uncertainty on corporate investment expenditures in China's emerging and transition economy. We further examine whether state ownership affects the relationship between oil price uncertainty and corporate investment. Consistent with the model's prediction, the main finding is that oil price uncertainty exerts a negative impact on corporate investment expenditures. In addition, compared with state-owned listed companies, the negative influence of oil price uncertainty on corporate investment is more significant for non-state-owned listed companies. Our further analysis, using the market-oriented reform of refined oil pricing in 2008 as a quasi-natural event, shows the variation between the low-degree marketization period and the high-degree one in terms of the relationship between international oil price uncertainty, state ownership and corporate investment expenditures.

Suggested Citation

  • Wang, Yong & Xiang, Erwei & Cheung, Adrian (Wai Kong) & Ruan, Wenjuan & Hu, Wei, 2017. "International oil price uncertainty and corporate investment: Evidence from China's emerging and transition economy," Energy Economics, Elsevier, vol. 61(C), pages 330-339.
    • Handle: RePEc:eee:eneeco:v:61:y:2017:i:c:p:330-339
    DOI: 10.1016/j.eneco.2016.11.024
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    More about this item

    Keywords

    International oil price uncertainty; Corporate investment; State ownership; Refined oil pricing marketization reform;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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