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Effect of Crude Oil Price Volatilities on the Leverage Requirements of Companies Listed on the Stock Exchange

Pizhūhishnāmah-i iqtiṣād-i inirzhī-i Īrān (Online), 2023-03, Vol.12 (46), p.131-150 [Peer Reviewed Journal]

ISSN: 2423-5954 ;EISSN: 2476-6437 ;DOI: 10.22054/jiee.2023.70624.1958

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  • Title:
    Effect of Crude Oil Price Volatilities on the Leverage Requirements of Companies Listed on the Stock Exchange
  • Author: Sima Arabani ; masomeh Latifi Benmaran
  • Subjects: crude oil price volatilities ; financial leverage ; risk
  • Is Part Of: Pizhūhishnāmah-i iqtiṣād-i inirzhī-i Īrān (Online), 2023-03, Vol.12 (46), p.131-150
  • Description: During the last decade, the international price of crude oil has experienced frequent periods of volatility; which has motivated researchers to investigate how oil price uncertainty affects economic activities and financial markets. Reasonably, oil, as a direct or indirect input factor, can strongly affect the cost of production and profitability expectations of companies. Accordingly, oil price changes can change the company's decision-making and performance. In this regard, we have investigated in the present research the impact of crude oil price volatility on the leverage criteria of companies admitted to the Tehran Stock Exchange. For this purpose, we have used the data of 160 selected companies during the period of 2011 to 2019. We used the panel data method in order to analyze the collected data. The findings of the research showed that crude oil price volatility had negative and significant effects on the leverage criteria of listed companies. Therefore, we concluded that companies reduce their demand for financing to overcome the uncertainty of oil prices. Consequently, an increase in uncertainty in oil prices can motivate companies to reduce their demand for external financing and thus reduce their leverage.
  • Publisher: Allameh Tabataba'i University Press
  • Language: Persian
  • Identifier: ISSN: 2423-5954
    EISSN: 2476-6437
    DOI: 10.22054/jiee.2023.70624.1958
  • Source: DOAJ Directory of Open Access Journals
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