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Oil price and firm profitability: evidence from Vietnamese stock market

By In Archives, Past Issue, 2020, Vol. 20 No. 01, 2020 On May 14, 2020


Tran Quoc Trung[1]

Foreign Trade University, Ho Chi Minh City, Vietnam

Vo Thi Thien Trang

Foreign Trade University, Ho Chi Minh City, Vietnam

Paper No:Vol.20 No.1, March, 2020

Received: 16 November 2018; Revised: 13 March 2020; Accepted: 20 March 2020

Abstract

Although many prior studies show that oil price affects negatively macroeconomic environment and stock prices, there are few studies on the impact of oil price on firm profitability. This paper posits that oil price tends to affect firm profitability negatively via increases in production costs and negative changes in the macroeconomic environment.  As a transition economy, Vietnam has been gradually integrated into the world economy and affected by international economic shocks. Therefore, Vietnam is a potential laboratory to investigate the effect of oil price as an exogenous factor on firm profitability. Using a sample of 6,960 observations from 951 firms listed in Ho Chi Minh City Stock Exchange (HOSE) and Hanoi Stock Exchange (HNX) between 2005 and 2016, we find supporting evidence for the negative impact of oil price on firm profitability.

Keywords: Oil price, Profitability, Vietnam

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[1] Corresponding author: tranquoctrung.cs2@ftu.edu.vn

 


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