Oil price uncertainty, oil pricing reform, and corporate profitability: The case of China.
This study investigates the impact of oil price uncertainty (OPU) on corporate profitability in China, the world's largest crude oil consumer. Most importantly, we examine how the Chinese government's oil price reform affects this relationship. Using the yearly data of Chinese-listed compa...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Public Library of Science (PLoS)
2024-01-01
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| Series: | PLoS ONE |
| Online Access: | https://journals.plos.org/plosone/article/file?id=10.1371/journal.pone.0297554&type=printable |
| _version_ | 1827356693535653888 |
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| author | Giang Thi Huong Vuong Manh Huu Nguyen Khanh Hoang |
| author_facet | Giang Thi Huong Vuong Manh Huu Nguyen Khanh Hoang |
| author_sort | Giang Thi Huong Vuong |
| collection | DOAJ |
| description | This study investigates the impact of oil price uncertainty (OPU) on corporate profitability in China, the world's largest crude oil consumer. Most importantly, we examine how the Chinese government's oil price reform affects this relationship. Using the yearly data of Chinese-listed companies, we find that the uncertainty of oil prices negatively affects corporate profitability but positively impacts operating expenses from 2007 to 2020. This finding holds after robust tests, including alternative profitability metrics and endogeneity model. Most interestingly, implementing the 2013 market-oriented oil pricing reform amplifies the adverse impact of OPU on corporate profitability owing to increased operating costs in the post-2013 period. Moreover, the detrimental effect of uncertain oil prices on corporate profitability is less prominent for large-capitalized companies. This research adds to the body of knowledge on the factors affecting corporate profitability by highlighting the volatility effect of oil prices and government pricing mechanisms. The results offer grounds for legislators and corporate managers to consider how to control the uncertainty surrounding oil price matters to ensure stable corporate profitability. |
| first_indexed | 2024-03-08T05:13:37Z |
| format | Article |
| id | doaj.art-de21efdb1ecb44c3a37563d52903c59d |
| institution | Directory Open Access Journal |
| issn | 1932-6203 |
| language | English |
| last_indexed | 2024-03-08T05:13:37Z |
| publishDate | 2024-01-01 |
| publisher | Public Library of Science (PLoS) |
| record_format | Article |
| series | PLoS ONE |
| spelling | doaj.art-de21efdb1ecb44c3a37563d52903c59d2024-02-07T05:31:10ZengPublic Library of Science (PLoS)PLoS ONE1932-62032024-01-01192e029755410.1371/journal.pone.0297554Oil price uncertainty, oil pricing reform, and corporate profitability: The case of China.Giang Thi Huong VuongManh Huu NguyenKhanh HoangThis study investigates the impact of oil price uncertainty (OPU) on corporate profitability in China, the world's largest crude oil consumer. Most importantly, we examine how the Chinese government's oil price reform affects this relationship. Using the yearly data of Chinese-listed companies, we find that the uncertainty of oil prices negatively affects corporate profitability but positively impacts operating expenses from 2007 to 2020. This finding holds after robust tests, including alternative profitability metrics and endogeneity model. Most interestingly, implementing the 2013 market-oriented oil pricing reform amplifies the adverse impact of OPU on corporate profitability owing to increased operating costs in the post-2013 period. Moreover, the detrimental effect of uncertain oil prices on corporate profitability is less prominent for large-capitalized companies. This research adds to the body of knowledge on the factors affecting corporate profitability by highlighting the volatility effect of oil prices and government pricing mechanisms. The results offer grounds for legislators and corporate managers to consider how to control the uncertainty surrounding oil price matters to ensure stable corporate profitability.https://journals.plos.org/plosone/article/file?id=10.1371/journal.pone.0297554&type=printable |
| spellingShingle | Giang Thi Huong Vuong Manh Huu Nguyen Khanh Hoang Oil price uncertainty, oil pricing reform, and corporate profitability: The case of China. PLoS ONE |
| title | Oil price uncertainty, oil pricing reform, and corporate profitability: The case of China. |
| title_full | Oil price uncertainty, oil pricing reform, and corporate profitability: The case of China. |
| title_fullStr | Oil price uncertainty, oil pricing reform, and corporate profitability: The case of China. |
| title_full_unstemmed | Oil price uncertainty, oil pricing reform, and corporate profitability: The case of China. |
| title_short | Oil price uncertainty, oil pricing reform, and corporate profitability: The case of China. |
| title_sort | oil price uncertainty oil pricing reform and corporate profitability the case of china |
| url | https://journals.plos.org/plosone/article/file?id=10.1371/journal.pone.0297554&type=printable |
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