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The Influence of the Increase in Energy Prices on the Profitability of Companies in the European Union

Author

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  • Radu Herman

    (Faculty of Business and Administration, University of Bucharest, 030018 Bucharest, Romania)

  • Cornelia Nistor

    (Faculty of Business and Administration, University of Bucharest, 030018 Bucharest, Romania)

  • Nicolae Marius Jula

    (Faculty of Business and Administration, University of Bucharest, 030018 Bucharest, Romania)

Abstract

This study evaluates the influence of rising energy prices on firm-level profitability. According to the policies of the European Union, the aim is to achieve an energy union that offers all community economic agents safer, cleaner, and more affordable energy. For this study, 1342 updated observations from 16 European countries for the year 2022 were used, studying the influence of increasing energy prices on the decrease in profit. The increase in energy prices influences the risk of firms experiencing negative profitability in 2022 compared to 2018, as measured by the increase in the number of firms that register a profit of less than or equal to zero. Company characteristics, such as size and age, which positively influence the level of profitability, are statistically significant. Furthermore, this study shows that the business sector in which the firm operates influences the level of profitability in a differentiated manner. Linear and logistic regression methods were employed for the methodology.

Suggested Citation

  • Radu Herman & Cornelia Nistor & Nicolae Marius Jula, 2023. "The Influence of the Increase in Energy Prices on the Profitability of Companies in the European Union," Sustainability, MDPI, vol. 15(21), pages 1-16, October.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:21:p:15404-:d:1269664
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    References listed on IDEAS

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    1. Mona Yaghoubi & Reza Yaghoubi, 2024. "The Ups and Downs of Oil Prices: Asymmetric Impacts of Oil Price Volatility on Corporate Environmental Responsibility," Working Papers in Economics 24/11, University of Canterbury, Department of Economics and Finance.

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    Keywords

    company; energy; inflation; profit; sector;
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