Impact of the global green factor on the capitalization of oil companies in Russia

• Authors: Irina Filimonova , Anna Komarova , Mikhail Mishenin

Abstracts

EN

Research background: This paper studies the impact of a new so-called green factor on the capitalization of petroleum companies, which is becoming highly relevant in view of the signing of the Paris agreements in 2015 and the support for clean energy. Although society, international organizations, and government authorities encourage companies to reduce their environmental impact, one of the main reasons for responsible behavior is still economic efficiency. The oil industry, on the one hand, faces one of the most volatile markets and, on the other hand, has one of the largest environmental impacts of any industry. That requires a detailed study of interconnections between market capitalization and the green factor. Purpose of the article: A comprehensive study of factors affecting the level of capitalization of oil and gas companies in Russia and identification of the most significant among them with a special focus on the green factor. Methods: Econometric analysis of panel data for Russian petroleum companies. The database includes indicators for six major Russian oil companies from 2011 to 2018. The following groups of factors are analyzed to explain the change in the companies' capitalization: macroeconomic (GDP and inflation in Russia), microeconomic (companies' revenue, net profit, tax payment, return on assets, return on equity, ratio of borrowed capital to equity), industrial (oil export, refining, production and proven reserves of the companies), and the green factor. Findings & Value added: The selection of factors showed that the size of capitalization has been influenced most significantly by the following: the volume of the company's proven reserves, net profit, tax burden, and the green factor based on the policy of minimizing environmental damage. This result shows that investors consider companies with high environmental performance to be more valuable than companies with similar financial results but lower environmental ratings.

Keywords

EN

capitalization; ecology; oil company; green factor

• Publisher: Instytut Badań Gospodarczych
• Journal: Oeconomia Copernicana
• Year: 2020
• Volume: 11
• Issue: 2
• Pages: 309-324

Dates

published

2020

Contributors

author

Irina Filimonova

• Trofimuk Institute of Petroleum Geology and Geophysics of SB RAS, Novosibirsk State University

• https://orcid.org/0000000344476425

author

Anna Komarova

• Institute of Economics and Industrial Engineering of SB RAS, Novosibirsk State University, Russia

• https://orcid.org/0000000258441648

author

Mikhail Mishenin

• Trofimuk Institute of Petroleum Geology and Geophysics of SB RAS, Novosibirsk State University

• https://orcid.org/0000000170171698

References

• Alawneh, A. (2018). Dividends, net income after taxes and earnings per share and their impact on the market capitalization of listed companies AMMAN stock exchange during the period 1978-2016. International Journal of Economics and Finance, 10(10). doi: 10.5539/ijef.v10n10p69.
• Albertini, E. (2013). Does environmental management improve financial performance? A meta-analytical review. Organization & Environment, 26(4). doi: 10.1177/1086026613510301.
• Al-Malkawi, H. A. N., AlShiab, M. S., & Pillai, R. (2018). The impact of company fundamentals on common stock prices: evidence from MENA region. Business & Management Review, 9(4).
• Banerjee, R., & Gupta, K. (2017). The effects of environmental sustainability and R&D on corporate risk-taking: International evidence. Energy Economics, 65. doi: 10.1016/j.eneco.2017.04.016.
• Bhaskaran K. R., & Sukumaran S. K. (2016). An empirical study on the valuation of oil companies. OPEC Energy Review, 40(1). doi: 10.1111/opec.12064.
• Blumenshine, N., & Wunnava, P. (2010). The value of green: the effect of environmental rankings on market cap. Technology and Investment, 1. doi: 10.423 6/ti.2010.14030.
• Charlo, M., Moya, I., & Muñoz, A. (2017). Financial performance of socially responsible firms: the short- and long-term impact. Sustainability, 9, 1622. doi: 10.3390/su9091622.
• Domnikov, A., Chebotareva, G., Khomenko, P., & Khodorovsky, M. (2017). Risk-oriented investment in management of oil and gas company value. International Journal of Sustainable Development and Planning, 12(05). doi: 10.2495/ SDP-V12-N5-946-955.
• Dyck, A., Lins, K. V., Roth, L., & Wagner, H. F. (2019). Do institutional investors drive corporate social responsibility? International evidence. Journal of Financial Economics, 131(3). doi: 10.1016/j.jfineco.2018.08.013.
• Eder, L., Filimonova, I., Nemov, V., Komarova, A., & Sablin, K. (2019). Ecological aspects of economical development: issues of forecast greenhouse gas emissions in road transport in Europe and regions of Russia. E3S Web of Conferences, 80, 03010. doi: 10.1051/e3sconf/20198003010.
• Eder, L. V., Provornaya, I. V., Filimonova, I. V., Kozhevin, V. D., & Komarova, A. V. (2018). World energy market in the conditions of low oil prices, the role of renewable energy sources. Energy Procedia, 153. doi: 10.1016/j.egypro. 2018.10.068.
• Ewing, B. T., & Thompson, M. A. (2016). The role of reserves and production in the market capitalization of oil and gas companies. Energy Policy, 98. doi: 10.1016/j.enpol.2016.09.036.
• Filimonova, I. V., Eder, L. V., Komarova, A. V., Provornaya, I. V., & Nemov, V. Y. (2018). Resource regions of Russia: socio-economic indicators and innovative development. IOP Conference Series: Earth and Environmental Science, 206, 012020. doi: 10.1088/1755-1315/206/1/012020.
• Fjaertoft, D., & Lunden, L. P. (2015). Russian petroleum tax policy – continuous maneuvering in rocky waters. Energy Policy, 87.
• Horobet, A., Vrinceanu, G., Popescu, C., & Belascu, L. (2019). Oil price and stock prices of eu financial companies: evidence from panel data modeling. Energies, 12(21), 4072. doi: 10.3390/en12214072.
• Howard, A. W., & Harp, A. B. (2009). Oil and gas company valuations. Business Valuation Review, 28(1). doi: 10.5791/0882-2875-28.1.30.
• Jaimovich, N., & Rebelo, S. (2017). Nonlinear effects of taxation on growth. Journal of Political Economy, 125(1). doi: 10.1086/689607
• Kaiser, M. J. (2013). Oil and gas company production, reserves, and valuation. Journal of Sustainable Energy Engineering, 1(3).
• Kryukov, V., & Moe, A. (2018). Does Russian unconventional oil have a future? Energy Policy, 119. doi: 10.1016/j.enpol.2018.04.021.
• Kumar, S., & Shetty, S. (2018). Does environmental performance improve market valuation of the firm: evidence from Indian market. Environmental Economics and Policy Studies, 20(2). doi: 10.1007/s10018-017-0192-7.
• Lins, K. V., Servaes, H., & Tamayo, A. (2017). Social capital, trust, and firm performance: the value of corporate social responsibility during the financial crisis. Journal of Finance, 72(4). doi: 10.1111/jofi.12505.
• Lu, L. W., & Taylor, M. E. (2018), A study of the relationships among environmental performance, environmental disclosure, and financial performance. Asian Review of Accounting, 26(1). doi: 10.1108/ARA-01-2016-0010.
• Liu, N., Liu, C., Guo, Q., Da, B., Guan, L., & Chen, H. (2019). Corporate social responsibility and financial performance: a quantile regression approach. Sustainability, 11, 3717. doi: 10.3390/su11133717.
• Misund, B. (2016). Vertical integration and value-relevance: empirical evidence from oil and gas producers. Cogent Economics & Finance, 4(1). doi: 10.1080/ 23322039.2016.1264107.
• Misund, B., Asche, F., & Osmundsen, P. (2008). Industry upheaval and valuation: empirical evidence from the international oil and gas industry. International Journal of Accounting, 43(4). doi: 10.1016/j.intacc.2008.09.007.
• Murguia, J., & Lence, S. (2014). Investors’ reaction to environmental performance: a global perspective of the Newsweek ’s “Green Rankings”. Environmental and Resource Economics, 60. doi: 10.1007/s10640-014-9781-0.
• Nureev, R. M., & Busygin, E. G. (2019). Biggest public oil companies: impact of external and internal factors on capitalization. Finance: Theory and Practice, 23(5). doi: 10.26794/2587-5671-2019-23-5-87-100.
• Osmundsen, P., Asche, F., Misund, B., & Mohn, K. (2006). Valuation of international oil companies. Energy Journal, 27(3). doi: 10.5547/ISSN0195-6574-EJ-Vol27-No3-4.
• Sabet, A. H., Agha, M., & Heaney, R. (2018). Value of investment: evidence from the oil and gas industry. Energy Economics, 70. doi: 10.1016/j.eneco.2018. 01.006.
• Shrivastava, M., & Tamvada, J. P. (2019). Which green matters for whom? Greening and firm performance across age and size distribution of firms. Small Business Economics, 52(4). doi: 10.1007/s11187-017-9942-y.

Identifiers

DOI

10.24136/oc.2020.013

Biblioteka Nauki

19233514