Resource nationalism meets the market: Political risk and the value of petroleum reserves

Reid W Click and Robert J Weiner
Additional contact information
Reid W Click: Department of International Business, George Washington University School of Business, Washington, DC, USA
Robert J Weiner: Department of International Business, George Washington University School of Business, Washington, DC, USA

Journal of International Business Studies, 2010, vol. 41, issue 5, 783-803

Abstract: This paper investigates the effect of resource nationalism on the value of petroleum (crude oil and natural gas) reserves. We develop a framework for treating resource nationalism as political risk, and utilize data on reserve transactions (from John S. Herold) and political risk ratings (from International Country Risk Guide and Institutional Investor) for the period 2000–2006. Controlling for other factors that affect reserve value, we demonstrate the value destruction of political risk, and estimate the political risk discount for 37 countries. The paper contributes to both the international business literature and practitioner approaches to political risk analysis in demonstrating use of publicly available market data from real-asset transactions to measure the cost of political risk. We also show that the discount depends on market conditions: the higher expected future petroleum prices are, the larger is the discount at any level of political risk. This insight adds a new dimension to analysis of political risk, which is typically measured and examined without regard to market conditions.

Date: 2010
References: Add references at CitEc
Citations: View citations in EconPapers (37)

Downloads: (external link)
http://www.palgrave-journals.com/jibs/journal/v41/n5/pdf/jibs200990a.pdf Link to full text PDF (application/pdf)
http://www.palgrave-journals.com/jibs/journal/v41/n5/full/jibs200990a.html Link to full text HTML (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:jintbs:v:41:y:2010:i:5:p:783-803

Ordering information: This journal article can be ordered from
http://www.springer. ... nt/journal/41267/PS2

Access Statistics for this article

Journal of International Business Studies is currently edited by John Cantwell

More articles in Journal of International Business Studies from Palgrave Macmillan, Academy of International Business
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().