Impact of the global green factor on the capitalization of oil companies in Russia

Authors

DOI:

https://doi.org/10.24136/oc.2020.013

Keywords:

capitalization, ecology, oil company, green factor

Abstract

Research background: This paper studies the impact of a new so-called green factor on the capitalization of petroleum companies, which is becoming highly relevant in view of the signing of the Paris agreements in 2015 and the support for clean energy. Although society, international organizations, and government authorities encourage companies to reduce their environmental impact, one of the main reasons for responsible behavior is still economic efficiency. The oil industry, on the one hand, faces one of the most volatile markets and, on the other hand, has one of the largest environmental impacts of any industry. That requires a detailed study of interconnections between market capitalization and the green factor.

Purpose of the article: A comprehensive study of factors affecting the level of capitalization of oil and gas companies in Russia and identification of the most significant among them with a special focus on the green factor.

Methods: Econometric analysis of panel data for Russian petroleum companies. The database includes indicators for six major Russian oil companies from 2011 to 2018. The following groups of factors are analyzed to explain the change in the companies? capitalization: macroeconomic (GDP and inflation in Russia), microeconomic (companies? revenue, net profit, tax payment, return on assets, return on equity, ratio of borrowed capital to equity), industrial (oil export, refining, production and proven reserves of the companies), and the green factor.

Findings & Value added: The selection of factors showed that the size of capitalization has been influenced most significantly by the following: the volume of the company's proven reserves, net profit, tax burden, and the green factor based on the policy of minimizing environmental damage. This result shows that investors consider companies with high environmental performance to be more valuable than companies with similar financial results but lower environmental ratings.

Downloads

Download data is not yet available.

References

Alawneh, A. (2018). Dividends, net income after taxes and earnings per share and their impact on the market capitalization of listed companies AMMAN stock exchange during the period 1978-2016. International Journal of Economics and Finance, 10(10). doi: 10.5539/ijef.v10n10p69.

DOI: https://doi.org/10.5539/ijef.v10n10p69
View in Google Scholar

Albertini, E. (2013). Does environmental management improve financial performance? A meta-analytical review. Organization & Environment, 26(4). doi: 10.1177/1086026613510301.

DOI: https://doi.org/10.1177/1086026613510301
View in Google Scholar

Al-Malkawi, H. A. N., AlShiab, M. S., & Pillai, R. (2018). The impact of company fundamentals on common stock prices: evidence from MENA region. Business & Management Review, 9(4).
View in Google Scholar

Banerjee, R., & Gupta, K. (2017). The effects of environmental sustainability and R&D on corporate risk-taking: International evidence. Energy Economics, 65. doi: 10.1016/j.eneco.2017.04.016.

DOI: https://doi.org/10.1016/j.eneco.2017.04.016
View in Google Scholar

Bhaskaran K. R., & Sukumaran S. K. (2016). An empirical study on the valuation of oil companies. OPEC Energy Review, 40(1). doi: 10.1111/opec.12064.

DOI: https://doi.org/10.1111/opec.12064
View in Google Scholar

Blumenshine, N., & Wunnava, P. (2010). The value of green: the effect of environmental rankings on market cap. Technology and Investment, 1. doi: 10.423 6/ti.2010.14030.
View in Google Scholar

Charlo, M., Moya, I., & Muñoz, A. (2017). Financial performance of socially responsible firms: the short- and long-term impact. Sustainability, 9, 1622. doi: 10.3390/su9091622.

DOI: https://doi.org/10.3390/su9091622
View in Google Scholar

Domnikov, A., Chebotareva, G., Khomenko, P., & Khodorovsky, M. (2017). Risk-oriented investment in management of oil and gas company value. International Journal of Sustainable Development and Planning, 12(05). doi: 10.2495/ SDP-V12-N5-946-955.

DOI: https://doi.org/10.2495/SDP-V12-N5-946-955
View in Google Scholar

Dyck, A., Lins, K. V., Roth, L., & Wagner, H. F. (2019). Do institutional investors drive corporate social responsibility? International evidence. Journal of Financial Economics, 131(3). doi: 10.1016/j.jfineco.2018.08.013.

DOI: https://doi.org/10.1016/j.jfineco.2018.08.013
View in Google Scholar

Eder, L., Filimonova, I., Nemov, V., Komarova, A., & Sablin, K. (2019). Ecological aspects of economical development: issues of forecast greenhouse gas emissions in road transport in Europe and regions of Russia. E3S Web of Conferences, 80, 03010. doi: 10.1051/e3sconf/20198003010.

DOI: https://doi.org/10.1051/e3sconf/20198003010
View in Google Scholar

Eder, L. V., Provornaya, I. V., Filimonova, I. V., Kozhevin, V. D., & Komarova, A. V. (2018). World energy market in the conditions of low oil prices, the role of renewable energy sources. Energy Procedia, 153. doi: 10.1016/j.egypro. 2018.10.068.

DOI: https://doi.org/10.1016/j.egypro.2018.10.068
View in Google Scholar

Ewing, B. T., & Thompson, M. A. (2016). The role of reserves and production in the market capitalization of oil and gas companies. Energy Policy, 98. doi: 10.1016/j.enpol.2016.09.036.

DOI: https://doi.org/10.1016/j.enpol.2016.09.036
View in Google Scholar

Filimonova, I. V., Eder, L. V., Komarova, A. V., Provornaya, I. V., & Nemov, V. Y. (2018). Resource regions of Russia: socio-economic indicators and innovative development. IOP Conference Series: Earth and Environmental Science, 206, 012020. doi: 10.1088/1755-1315/206/1/012020.

DOI: https://doi.org/10.1088/1755-1315/206/1/012020
View in Google Scholar

Fjaertoft, D., & Lunden, L. P. (2015). Russian petroleum tax policy – continuous maneuvering in rocky waters. Energy Policy, 87.

DOI: https://doi.org/10.1016/j.enpol.2015.09.042
View in Google Scholar

Horobet, A., Vrinceanu, G., Popescu, C., & Belascu, L. (2019). Oil price and stock prices of eu financial companies: evidence from panel data modeling. Energies, 12(21), 4072. doi: 10.3390/en12214072.

DOI: https://doi.org/10.3390/en12214072
View in Google Scholar

Howard, A. W., & Harp, A. B. (2009). Oil and gas company valuations. Business Valuation Review, 28(1). doi: 10.5791/0882-2875-28.1.30.

DOI: https://doi.org/10.5791/0882-2875-28.1.30
View in Google Scholar

Jaimovich, N., & Rebelo, S. (2017). Nonlinear effects of taxation on growth. Journal of Political Economy, 125(1). doi: 10.1086/689607

DOI: https://doi.org/10.1086/689607
View in Google Scholar

Kaiser, M. J. (2013). Oil and gas company production, reserves, and valuation. Journal of Sustainable Energy Engineering, 1(3).

DOI: https://doi.org/10.7569/JSEE.2013.629527
View in Google Scholar

Kryukov, V., & Moe, A. (2018). Does Russian unconventional oil have a future? Energy Policy, 119. doi: 10.1016/j.enpol.2018.04.021.

DOI: https://doi.org/10.1016/j.enpol.2018.04.021
View in Google Scholar

Kumar, S., & Shetty, S. (2018). Does environmental performance improve market valuation of the firm: evidence from Indian market. Environmental Economics and Policy Studies, 20(2). doi: 10.1007/s10018-017-0192-7.

DOI: https://doi.org/10.1007/s10018-017-0192-7
View in Google Scholar

Lins, K. V., Servaes, H., & Tamayo, A. (2017). Social capital, trust, and firm performance: the value of corporate social responsibility during the financial crisis. Journal of Finance, 72(4). doi: 10.1111/jofi.12505.

DOI: https://doi.org/10.1111/jofi.12505
View in Google Scholar

Lu, L. W., & Taylor, M. E. (2018), A study of the relationships among environmental performance, environmental disclosure, and financial performance. Asian Review of Accounting, 26(1). doi: 10.1108/ARA-01-2016-0010.

DOI: https://doi.org/10.1108/ARA-01-2016-0010
View in Google Scholar

Liu, N., Liu, C., Guo, Q., Da, B., Guan, L., & Chen, H. (2019). Corporate social responsibility and financial performance: a quantile regression approach. Sustainability, 11, 3717. doi: 10.3390/su11133717.

DOI: https://doi.org/10.3390/su11133717
View in Google Scholar

Misund, B. (2016). Vertical integration and value-relevance: empirical evidence from oil and gas producers. Cogent Economics & Finance, 4(1). doi: 10.1080/ 23322039.2016.1264107.

DOI: https://doi.org/10.1080/23322039.2016.1264107
View in Google Scholar

Misund, B., Asche, F., & Osmundsen, P. (2008). Industry upheaval and valuation: empirical evidence from the international oil and gas industry. International Journal of Accounting, 43(4). doi: 10.1016/j.intacc.2008.09.007.

DOI: https://doi.org/10.1016/j.intacc.2008.09.007
View in Google Scholar

Murguia, J., & Lence, S. (2014). Investors’ reaction to environmental performance: a global perspective of the Newsweek ’s “Green Rankings”. Environmental and Resource Economics, 60. doi: 10.1007/s10640-014-9781-0.

DOI: https://doi.org/10.1007/s10640-014-9781-0
View in Google Scholar

Nureev, R. M., & Busygin, E. G. (2019). Biggest public oil companies: impact of external and internal factors on capitalization. Finance: Theory and Practice, 23(5). doi: 10.26794/2587-5671-2019-23-5-87-100.

DOI: https://doi.org/10.26794/2587-5671-2019-23-5-87-100
View in Google Scholar

Osmundsen, P., Asche, F., Misund, B., & Mohn, K. (2006). Valuation of international oil companies. Energy Journal, 27(3). doi: 10.5547/ISSN0195-6574-EJ-Vol27-No3-4.

DOI: https://doi.org/10.5547/ISSN0195-6574-EJ-Vol27-No3-4
View in Google Scholar

Sabet, A. H., Agha, M., & Heaney, R. (2018). Value of investment: evidence from the oil and gas industry. Energy Economics, 70. doi: 10.1016/j.eneco.2018. 01.006.

DOI: https://doi.org/10.1016/j.eneco.2018.01.006
View in Google Scholar

Shrivastava, M., & Tamvada, J. P. (2019). Which green matters for whom? Greening and firm performance across age and size distribution of firms. Small Business Economics, 52(4). doi: 10.1007/s11187-017-9942-y.

DOI: https://doi.org/10.1007/s11187-017-9942-y
View in Google Scholar

Downloads

Published

2020-06-22

How to Cite

Filimonova, I., Komarova, A., & Mishenin, M. (2020). Impact of the global green factor on the capitalization of oil companies in Russia. Oeconomia Copernicana, 11(2), 309–324. https://doi.org/10.24136/oc.2020.013

Issue

Section

Articles

Similar Articles

<< < 4 5 6 7 8 9 10 > >> 

You may also start an advanced similarity search for this article.