Navigating Through Crisis: The Impact of Capital Structure on Firm Performance in the Oil and Gas Industry During COVID-19
(2024) IBUH19 20241Department of Business Administration
- Abstract
- The relationship between capital structure and firm performance has been a recurring topic of discussion. Within this context, frameworks such as the Modigliani and Miller, Trade-Off, Market Timing, Pecking Order, Agency theories have been widely examined by researchers, offering diverse viewpoints on how capital structure decisions impact corporate performance in distinct industrial, regional and economic environments. With this in mind, this study explores the complex relationship between capital structure and performance of oil and gas firms within G10 countries, representing 11 of the world’s largest economies.
By focusing on a four-year period from 2020 to 2023, this research aims to reveal how various capital structure strategies,... (More) - The relationship between capital structure and firm performance has been a recurring topic of discussion. Within this context, frameworks such as the Modigliani and Miller, Trade-Off, Market Timing, Pecking Order, Agency theories have been widely examined by researchers, offering diverse viewpoints on how capital structure decisions impact corporate performance in distinct industrial, regional and economic environments. With this in mind, this study explores the complex relationship between capital structure and performance of oil and gas firms within G10 countries, representing 11 of the world’s largest economies.
By focusing on a four-year period from 2020 to 2023, this research aims to reveal how various capital structure strategies, including short-term and long-term debt financing, as well as equity financing, influence business performance throughout the highly volatile period marked by the COVID-19 pandemic. Through the use of quantitative methods, namely panel data analysis, the study estimates organizational performance by employing both accounting and market-based metrics such as ROA, ROE, and the Tobin’s Q ratio. Furthermore, to enhance its reliability, the paper focuses exclusively on publicly-listed oil and gas firms, excluding private corporations, given data availability constraints.
That being said, the findings indicate a mixed relationship between leverage and company performance, where, on one hand, both short-term and long-term debt were found to diminish profitability; while on the other, the Debt-to-Equity ratio exhibited varied outcomes. By comparing the empirical observations against the aforementioned theories, this analysis provides readers with insights into the role capital structure plays in shaping performance in oil and gas enterprises. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9154831
- author
- Segura-Pekalski, Krystian Raúl LU ; Andsberg, Petra LU and Fetahu, Aulonë LU
- supervisor
- organization
- course
- IBUH19 20241
- year
- 2024
- type
- M2 - Bachelor Degree
- subject
- keywords
- Capital Structure, Firm Performance, Oil and Gas Industry, G10 Countries, COVID-19.
- language
- English
- id
- 9154831
- date added to LUP
- 2024-08-07 17:51:10
- date last changed
- 2024-08-07 17:51:10
@misc{9154831,
abstract = {{The relationship between capital structure and firm performance has been a recurring topic of discussion. Within this context, frameworks such as the Modigliani and Miller, Trade-Off, Market Timing, Pecking Order, Agency theories have been widely examined by researchers, offering diverse viewpoints on how capital structure decisions impact corporate performance in distinct industrial, regional and economic environments. With this in mind, this study explores the complex relationship between capital structure and performance of oil and gas firms within G10 countries, representing 11 of the world’s largest economies.
By focusing on a four-year period from 2020 to 2023, this research aims to reveal how various capital structure strategies, including short-term and long-term debt financing, as well as equity financing, influence business performance throughout the highly volatile period marked by the COVID-19 pandemic. Through the use of quantitative methods, namely panel data analysis, the study estimates organizational performance by employing both accounting and market-based metrics such as ROA, ROE, and the Tobin’s Q ratio. Furthermore, to enhance its reliability, the paper focuses exclusively on publicly-listed oil and gas firms, excluding private corporations, given data availability constraints.
That being said, the findings indicate a mixed relationship between leverage and company performance, where, on one hand, both short-term and long-term debt were found to diminish profitability; while on the other, the Debt-to-Equity ratio exhibited varied outcomes. By comparing the empirical observations against the aforementioned theories, this analysis provides readers with insights into the role capital structure plays in shaping performance in oil and gas enterprises.}},
author = {{Segura-Pekalski, Krystian Raúl and Andsberg, Petra and Fetahu, Aulonë}},
language = {{eng}},
note = {{Student Paper}},
title = {{Navigating Through Crisis: The Impact of Capital Structure on Firm Performance in the Oil and Gas Industry During COVID-19}},
year = {{2024}},
}