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International oil price uncertainty and corporate investment: Evidence from China's emerging and transition economy

Yong Wang, Erwei Xiang, Adrian (Wai-Kong) Cheung, Wenjuan Ruan and Wei Hu

Energy Economics, 2017, vol. 61, issue C, 330-339

Abstract: We develop and estimate a dynamic model of investment to investigate the impact of international oil price uncertainty on corporate investment expenditures in China's emerging and transition economy. We further examine whether state ownership affects the relationship between oil price uncertainty and corporate investment. Consistent with the model's prediction, the main finding is that oil price uncertainty exerts a negative impact on corporate investment expenditures. In addition, compared with state-owned listed companies, the negative influence of oil price uncertainty on corporate investment is more significant for non-state-owned listed companies. Our further analysis, using the market-oriented reform of refined oil pricing in 2008 as a quasi-natural event, shows the variation between the low-degree marketization period and the high-degree one in terms of the relationship between international oil price uncertainty, state ownership and corporate investment expenditures.

Keywords: International oil price uncertainty; Corporate investment; State ownership; Refined oil pricing marketization reform (search for similar items in EconPapers)
JEL-codes: G31 G32 G38 Q41 Q43 (search for similar items in EconPapers)
Date: 2017
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Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

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