| Summary: | 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.
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