Wes e man, Wim; Ensing, Luuk
A icle
The ela ionship be ween global oil p ices and he
p o i abili y o Du ch public companies
The Cen al Eu opean Re iew o Economics and Managemen (CEREM)
P o ided in Coope a ion wi h:
WSB Me i o Uni e si y in W ocław
Sugges ed Ci a ion: Wes e man, Wim; Ensing, Luuk (2025) : The ela ionship be ween global oil p ices
and he p o i abili y o Du ch public companies, The Cen al Eu opean Re iew o Economics and
Managemen (CEREM), ISSN 2544-0365, WSB Me i o Uni e si y in W oclaw, W oclaw, Vol. 9, Iss. 1,
pp. 7-26,
h ps://doi.o g/10.29015/ce em.1019
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CENTRAL EUROPEAN REVIEW
OF ECONOMICS AND MANAGEMENT
ISSN 2543-9472; eISSN 2544-0365
www.ce em- e iew.eu
www.ojs.wsb.w oclaw.pl
Vol. 9, No.1, Ma ch 2025, 7-26
Co espondence add ess: Wim WESTERMAN, Rijksuni e si ei G oningen, Facul y o Economics &
Business, Ne elbosje 2, 9747 AE G oningen, The Ne he lands, The Ne he lands. E-mail:
[email p o ec ed].
© 2025 WSB MERITO UNIVERSITY WROCŁAW
The ela ionship be ween global oil p ices and he
p o i abili y o Du ch public companies
Wim WESTERMAN, Luuk ENSING
Rijksuni e si ei G oningen, The Ne he lands
Recei ed: 02.10.2024, Re ised: 11.12.2024, Accep ed: 18.12.2024
doi: h p://10.29015/ce em.1019
Aim: This s udy hono s he pionee ing wo k by And é Do sman on ene gy inance, especially on oil
p ices and company pe o mance. The objec i e is o in es iga e he ela ionship be ween he global oil
p ice and he p o i abili y o Du ch companies.
Design / Resea ch me hods: In ou esea ch, a model is o med which e alua es he ela ionship be ween
a global oil p ice index and he p o i abili y o Du ch public companies. Publicly a ailable da a om 143
Du ch lis ed i ms du ing he pe iod 2010 ill 2023 has been used o conduc his esea ch. Besides he
independen a iable ( he oil p ice) and he dependen a iables ( e u n on asse s and e u n on equi y),
a i m’s le e age, ma ke capi aliza ion and deg ee o in e na ionaliza ion a e used as con ol a iables
in he concep ual model. The model is e alua ed ia mul iple panel eg ession analyses.
Conclusions / indings: We e eal a posi i e ela ionship be ween he oil p ice and he e u n on asse s
as well as he e u n on equi y. Howe e , his ela ionship is dependen upon he p esence o oil and
ene gy ela ed companies in he sample. When oil and ene gy ela ed companies a e emo ed om he
sample, no ela ionship is ound be ween he global oil p ice and p o i abili y. The con ol a iable
ma ke capi aliza ion is ound o be signi ican and posi i ely ela ed o e u n on equi y and e u n on
asse s. Con a y, he con ol a iable le e age is ound o be nega i ely ela ed o e u n on asse s. The
a iable o deg ee o in e na ionaliza ion o Du ch i ms is insigni ican o all he eg ession models,
indica ing ha he e is no linea ela ionship be ween he deg ee o in e na ionaliza ion and p o i abili y.
O iginali y / alue o he a icle: The s udy con i ms a complica ed ela ionship be ween oil p ices and
company p o i abili y.
Keywo ds: oil p ice, p o i abili y, Du ch companies
JEL Codes: G10, L95
Wim WESTERMAN, Luuk ENSING
8
1. In oduc ion
This s udy hono s he pionee ing wo k o And é Do sman in he p ac ice and
schola ly ield o ene gy economics and inance, bo h in in he Ne he lands and way
beyond, as he long- e m P esiden o he Cen e o Ene gy Economics and Value
Issues (CEVI).
Ou esea ch pape in es iga es he ela ionship be ween he global oil p ice and
he p o i abili y o Du ch companies. Oil, also known as c ude oil o pe oleum is a
liquid na u ally o med in ce ain geog aphical loca ions. The p oduc is used o
many applica ions such as anspo a ion, hea ing, ood p oduc ion and cosme ics. The
e sa ili y and equency o use o he p oduc causes oil o be a de e minan o
economic g ow h (Hanabusa 2009).
Oil is sold in he o m o ba els in he global commodi y ma ke . The p ice pe
ba el is de e mined by supply and demand condi ions. The supply o oil is mos ly
con olled by a small numbe o coun ies, hese coun ies a e pa icipa ing in, o
aligning wi h, he so-called OPEC(+) ca el. The O ganiza ion o Pe oleum
Expo ing Coun ies con ols a ound 40% o he global oil supply. These coun ies
o ganize mee ings o de e mine he cumula i e oil supply. The supply decisions made
in he OPEC(+) mee ings change he p ice pe ba el. The demand o oil is mo e
luen and can mo e due o changes in ac o s such as: economic g ow h, ene gy
consump ion and geopoli ical.
Since oil is used o such a a ie y o applica ions, he p ice o oil in luences he
cos s companies make. Mos equen expenses include anspo a ion cos s and
manu ac u ing cos s, bu oil also changes o he business expenses. The e o e, i is
expec ed ha oil p ices change he p o i abili y o companies.
Resea ch has indica ed ha a highe oil p ice esul s in mo e p o i o companies
in he oil & gas indus y (Dayanandan, Donke 2011). Despi e he lack o oil expo s
in he Ne he lands⎯ he Ne he lands impo ed 98 million ons o oil in 2020 and
du ing he same yea he e we e no expo s, he e a e s ill 12 companies included in
he sample o his esea ch pape , which a e in he oil and/o ene gy sec o .
Gi en he ac ha The Ne he lands has no oil expo s, i is expec ed ha Du ch
business a e nega i ely a ec ed by highe oil p ices since hei business expenses will
THE RELATIONSHIP BETWEEN GLOBAL OIL PRICES AND THE PROFITABILITY …
9
inc ease. Ne e heless, i should be no ed ha a high oil p ice is he e ec o a high
demand, supply, o bo h. Mo eo e , gene ally, a high oil demand is associa ed wi h
much economic ac i i y.
Conside ing ha he e is no dominan pa adigm on he e ec o he oil p ice on
he Du ch economy, his pape seeks o p o ide answe s o he ques ion: ‘How does
he global oil p ice ela e o he p o i abili y o Du ch public companies?’. Company
manage s can use he esul s p o ided o suppo hei p o i abili y o ecas s, and
ul ima ely o be be e in o med abou he e ec s o he oil p ice on he Du ch
economy.
Wi h he aim o answe ing he esea ch ques ion, a concep ual model was o med.
The model ela es he e ec s o oil p ices (independen a iable), i m size (con ol
a iable), le e age (con ol a iable), and deg ee o in e na ionaliza ion (con ol
a iable) o he p o i abili y (dependen a iable) o Du ch companies.
The sample used includes 143 public companies wi h hei headqua e s loca ed
in he Ne he lands. Yea ly da a om he pe iod 2010–2022 is used. The company
speci ic da a ( i m size, le e age, deg ee o in e na ionaliza ion and p o i abili y) is
sou ced ia Eikon Re ini i . The oil p ice is sou ced om he OPEC e e ence baske ,
ORB (h ps://www.opec.o g/opec_web/en/da a_g aphs/40.h m). This index is made
up o he Saha an Blend (Alge ia), Djeno (Congo), Za i o (Equa o ial Guinea), Rabi
Ligh (Gabon), I an Hea y (Islamic Republic o I an), Bas a Medium (I aq), Kuwai
Expo (Kuwai ), Es Side (Libya), Bonny Ligh (Nige ia), A ab Ligh (Saudi A abia),
Mu ban (UAE) and Me ey (Venezuela).
Since he da a is likely a ec ed by he e oscedas ici y and au oco ela ion
p oblems, he concep ual model is es ed ia a GLS (gene alized leas squa es)
es ima o ins ead o he OLS (o dina y leas squa es) me hod. A ixed e ec s and
andom e ec s model a e pe o med, whe ea e a Hausman es is pe o med o
e alua e which model can bes e alua e he da a. The ea e , he e ec o he oil p ice
on he e u n o equi y is measu ed. Finally, wo ixed e ec s eg essions a e
pe o med. The eg essions a e on a sample excluding he oil and ene gy companies
while he second sample excludes all companies excep hose in he oil and ene gy
sec o .
Wim WESTERMAN, Luuk ENSING
10
A de ailed desc ip ion o he a ailable li e a u e can be ound in he li e a u e
e iew in sec ion 2. The desc ip i e s a is ics and esea ch design a e explained in he
me hodology sec ion (3). The eg ession esul s can be ound in he indings (sec ion
4). The discussion o he indings is p o ided in sec ion 5. The conclusion o he
esea ch ollows in sec ion 6. Finally, limi a ions and ecommenda ions a e gi en
(sec ion 7).
2. Li e a u e e iew
The li e a u e e iew is based upon pee - e iewed a icles published by enowned
jou nals. In o al, 11 majo a icles ha e helped o de elop his esea ch. A summa y
o hese a icles is a ailable upon eques . In his li e a u e e iew, a selec ion o h ee
main a icles has been made. The a icles helped o de ine and selec he independen
a iables. Addi ionally, he a icles p o ided a base o o ming he es ed hypo heses.
The a ailable li e a u e on he opic can be ca ego ized in wo b oad ca ego ies:
oil, and p o i abili y. Na u ally, academic a icles combining he wo opics a e mos
ele an . Despi e hei ele ance, he e seems o be a lack o a icles combining oil
and p o i abili y. Mo e commonly, he ela ionship be ween oil and economic ac o s
such as g ow h and in la ion a e s udied.
2.1. Oil p ice
The independen a iable ( he oil p ice) is o en measu ed as he WTI (Wes Texas
In e media e) oil p ice o he B en C ude oil p ice. Selec ing one o he wo, o he
w ong p ice indica o , can lead o dec eased eliabili y o he esea ch. The w ong
p ice indica o can be selec ed, o mo e commonly, he p ice indica o selec ed does
no (comple ely) ep esen he a iable.
The pape The oil p ice does no exis (O iginal i le in Du ch: ‘De’ oliep ijs
bes aa nie ) w i en by And é Do sman, Je y de Leeuw and Ranji Nelissen (2008)
helps o de ine he a iable ‘oil p ice’. The au ho s o he pape no e ha he e is no
a single oil p ice. The e a e di e en oil p ices based upon di e en quali ies o oil
and geog aphic a eas. The au ho s ecommend using an index, combining di e en
THE RELATIONSHIP BETWEEN GLOBAL OIL PRICES AND THE PROFITABILITY …
11
oil p ices, o co ec ly measu e he a iable. We pick up his no ion by using he
OPEC-index ORB.
2.2. Hypo hesis o ma ion
Unde s anding he ela ionship be ween he oil p ice and economic ac o s can
help o de elop a hypo hesis ega ding he na u e o he e ec . Does a highe oil p ice
cause p o i abili y o g ow o o decline?
In he pape The Impac o In e na ional Oil P ice Fluc ua ion on China’s
Economy w i en by Zhang Qianqian (2011), he au ho s udies he e ec o oil p ice
luc ua ions on China’s economy. The esea ch es ablishes ha he oil p ice is
nega i ely co ela ed wi h ne expo s and eal ou pu . Addi ionally, he au ho inds
e idence o a posi i e link be ween oil p ices and in la ion.
Concluding om he indings in he s udy by Qianqian (2011), i is expec ed ha
a highe oil p ice is bad o he eal ou pu and ne expo s o he Ne he lands.
Mo eo e , a highe oil p ice would cause in la ion o be highe . All h ee causa ions
ound ha e bad implica ions o he p o i abili y o companies.
The indings om Oil p ices and p o i abili y pe o mance: sec o analysis,
w i en by Wo aphon Wa ana o n and Te mkia Kanchanapoom (2012), illus a e an
opposing iew. In his pape , he au ho s ha e used da a om he Thailand s ock
exchange. The indings sugges ha du ing he pe iod be ween 2001 and 2010 he oil
p ice has had a posi i e impac on he p o i abili y o companies in he ene gy and
ood sec o s. The s udy ocusses on o he sec o s o, bu no signi ican e ec s we e
ound.
The wo pape s illus a e con lic ing e ec s o oil p ices. While in he pape
au ho ed by Qianqian (2011) nega i e e ec s o a high oil p ice a e shown, he pape
by Wa ana o n and Kanchanapoom (2012) inds ha a high oil p ice has a signi ican
posi i e e ec on he p o i abili y o some indus y sec o s.
The opposing e ec s ha e helped wi h o ming he ollowing se o hypo heses:
H0: The e is no ela ionship be ween oil p ices and p o i abili y.
H1: The e is a ela ionship be ween oil p ices and p o i abili y o companies in he
oil & ene gy sec o .
H2: The e is a ela ionship be ween oil p ices and p o i abili y.
Wim WESTERMAN, Luuk ENSING
12
3. Me hodology
Based on he li e a u e e iew, a concep ual model (see Figu e 1) was made o
in es iga e he ela ionship be ween oil p ices and p o i abili y in he sample.
Figu e 1. Concep ual model
Sou ce: own elabo a ions.
3.1. The da a
The a iable speci ica ions a e gi en in Table 1 below. Con ol a iables help o
de ine he ela ionship be ween he oil p ice and p o i abili y. Le e age, size and
deg ee o in e na ionaliza ion a e chosen as con ol a iables.
In o al, ou eg essions a e pe o med on he whole sample and wo eg essions
a e pe o med on a subse . The whole sample includes all (143) public companies
headqua e ed in he Ne he lands. The wo eg essions on he pa ial da ase di ide
he sample in o wo g oups. One eg ession includes all oil and ene gy ela ed
companies (12) and he o he one excludes hese (131). The sample da a excludes
unds and is solely ocused on companies wi h o dina y sha es. Yea ly da apoin s
du ing he pe iod 2010–2022 a e used as he eg ession inpu . The i m speci ic da a
(le e age, i m size, deg ee o in e na ionaliza ion and p o i abili y) is sou ced ia
Oil p ice
Deg ee o
in e na ionaliza ion
Fi m size
Le e age
P o i abili y
THE RELATIONSHIP BETWEEN GLOBAL OIL PRICES AND THE PROFITABILITY …
13
Re ini i Eikon. The oil p ice is sou ced ia he ORB (OPEC Re e ence Baske ), an
index combined o di e en oil p ices deno ed in dolla s pe ba el. Since he da ase
co e s mul iple a iables o e a 12-yea pe iod, he da a is ca ego ized as panel /
longi udinal. Panel da a is likely o ha e he e oscedas ici y and au oco ela ion
p oblems. The e o e, he GLS (gene alized leas squa es) es ima o is used he e.
Table 1. Speci ica ion o a iables
Independen
a iables
Measu emen o m
Fo mula
P o i abili y
Re u n on asse s is used as he
main measu e o p o i abili y.
𝑅𝑂𝐴
= 𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒 + 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒
𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
Re u n on equi y is used o
con i m he main measu emen
o p o i abili y.
𝑅𝑂𝐸 = 𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒
𝑆ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠 𝑒𝑞𝑢𝑖𝑡𝑦
Dependen a iable:
Oil p ice
The OPEC baske p ice is used.
The OPEC baske p ice is an
index composed o di e en oil
p ices deno ed in dolla s pe
ba el o oil.
Con ol a iables:
Fi m size
Ma ke capi aliza ion is used as
he measu e o i m size.
Ma ke capi aliza ion is
measu ed in dolla s.
𝑀𝑎𝑟𝑘𝑒𝑡 𝑐𝑎𝑝𝑖𝑡𝑎𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛
= 𝑇𝑜𝑡𝑎𝑙 𝑠ℎ𝑎𝑟𝑒𝑠
∗ 𝑠ℎ𝑎𝑟𝑒𝑝𝑟𝑖𝑐𝑒
Deg ee o
in e na ionaliza ion
To al o eign sales in ela ion o
o al sales is used as he
measu e o he deg ee o
in e na ionaliza ion.
% 𝑜𝑓 𝑓𝑜𝑟𝑒𝑖𝑔𝑛 𝑠𝑎𝑙𝑒𝑠 = 𝐹𝑜𝑟𝑒𝑖𝑔𝑛 𝑠𝑎𝑙𝑒𝑠
𝑇𝑜𝑡𝑎𝑙 𝑠𝑎𝑙𝑒𝑠
Le e age
The deb o equi y equa ion is
used o measu e le e age.
𝐿𝑒𝑣𝑒𝑟𝑎𝑔𝑒 = 𝑇𝑜𝑡𝑎𝑙 𝑑𝑒𝑏𝑡
𝑇𝑜𝑡𝑎𝑙 𝑒𝑞𝑢𝑖𝑡𝑦
Sou ce: own elabo a ions.
3.2. Ou lie s
Boxplo s we e made o examine he aw da a dis ibu ion. The boxplo s illus a ed
ha he aw da a con ained many ou lie s. The ou lie s in he da ase gene a ed om
Re ini i Eikon we e compa ed o epo ed da a in he income s a emen s and annual
epo s o he companies and i needed eplaced by he la e .
The desc ip i e s a is ics in Table 2 below indica e ha he da a on: e u n on
asse s, e u n on equi y, ma ke capi aliza ion and le e age do no ollow a no mal
Wim WESTERMAN, Luuk ENSING
14
dis ibu ion. Ne e heless, da a on he oil p ice and pe cen o o eign sales nea ly
ollow a no mal dis ibu ion.
To dec ease he skewness and ku osis o he ma ke capi aliza ion and le e age
a iables, he na u al loga i hm o he a iables is used in he eg essions. Fo he
independen a iables ( e u n on asse s and e u n on equi y), no adjus men s we e
made. The skewness and ku osis canno be dec eased by o ming a na u al loga i hms
o he a iables since he da apoin s o he a iables a e dual-signed (nega i e and
posi i e).
Table 2. Desc ip i e s a is ics
Va iable
Numbe o
obse a ions
Skewness
Ku osis
Median
Min
Max
Re u n on asse s
1,327
-4.7
33.07
2.11
-254.57
64.23
Re u n on equi y
962
-2.61
73.71
0.10
-22.35
19.53
Oil p ice
13
0.03
1.52
69.89
40.76
109.45
Ma ke
capi aliza ion
1,338
7.99
93.42
547 million
10.53
327
million
Ln (ma ke
capi aliza ion)
1,338
-0.74
4.25
20.12
2.35
26.51
Le e age
1,190
4.36
29.47
59.98
0
1397.99
Ln (le e age)
1,190
-1.73
8.43
4.14
-3.91
7.24
Pe cen o eign
sales
805
-0.56
2.43
66.76
0.08
100
Bold a iables ep esen he no mal a iables ans o med o a na u al loga i hm.
Sou ce: own elabo a ions.
A co ela ion ma ix was made o unde s and he co ela ions be ween he
a iables. The ma ix shows ha he e is no co ela ion g ea e han |0.3| indica ing
ha he e is no se e e mul icollinea i y be ween he dependen a iables.
Fu he mo e, he ma ix indica es ha mos co ela ions a e no appa en , while some
a e weak.
THE RELATIONSHIP BETWEEN GLOBAL OIL PRICES AND THE PROFITABILITY …
21
The con ol a iables o ma ke capi aliza ion and le e age a e signi ican a he
90% le el and indica e ha a 1% inc ease in he na u al loga i hm o ma ke
capi aliza ion causes he e u n on asse s o inc ease by 0.03994251 pe cen age poin s,
ce e is pa ibus. A 1% inc ease in he na u al loga i hm o le e age causes he
dependen a iable o dec ease by 0.04518809 pe cen age poin s ce e is pa ibus.
5. Discussion
The indings show ha he oil p ice has a posi i e e ec on he p o i abili y o
Du ch public companies. Howe e , he indings also show ha his ela ionship is
based upon he p esence o oil and ene gy ela ed companies in he sample.
The inding es ablishing he posi i e and signi ican e ec o he global oil p ice
on he p o i abili y o oil and ene gy ela ed companies con i ms p e ious s udies such
as he ones by Dayanandan & Donke (2011) and Wa ana o n & Kanchanapoom
(2012). Bo h pape s acknowledge he posi i e ela ionship he oil p ice has on he
p o i abili y o oil and ene gy ela ed companies.
Exis ing li e a u e e alua ing he ela ionship be ween global oil p ices and he
p o i abili y o companies, p o ides di e gen esul s ega ding he na u e o he e ec
o oil p ices on p o i abili y. The li e a u e is known o be ocused on single coun ies
in i s analysis. This is causing he p esence o coun y dependen ac o s such as he
ype o companies in he coun y, he coun ies’ dependence on oil, he numbe o oil
ela ed companies in he sample, e ce e a, o de e mine he na u e o he ela ionship
be ween global oil p ices and p o i abili y.
The indings ha e shown ha he p esence o oil and ene gy ela ed companies in
he sample cause he o e all ela ionship be ween oil p ices and he p o i abili y o be
posi i e. The s ong p esence o oil and ene gy ela ed companies in he sample helps
o explain his inding. F om he 143 cu en ly ope a ing public companies in The
Ne he lands, 12 ope a e di ec ly in he oil and/o ene gy sec o . His o ically, The
Ne he lands always had a s ong ene gy sec o including names such as Royal Du ch
Shell ( ill 2022). Addi ionally, i should be conside ed ha he Ne he lands was a
majo expo e o na u al gas du ing he sample pe iod. The well-es ablished co-
Wim WESTERMAN, Luuk ENSING
22
mo emen o he oil and gas p ice could ha e caused he Du ch economy o indi ec ly
p o i om highe oil p ices.
The indings ha e also shown a posi i e and highly signi ican e ec o company
size on p o i abili y. This e ec is a long-es ablished phenomenon. Bigge companies
can bene i om economies o scale, ha e mo e buying powe and a e known o
ope a e in indus ies wi h high ba ie s o en y. Addi ionally, bigge companies ha e
mo e and be e access o (sca ce) esou ces.
The con ol a iable o le e age was signi ican in ou o he six models. In he
models whe e le e age was signi ican , le e age nega i ely in luenced e u n on
asse s. The nega i e e ec s o le e age on p o i abili y con adic s he gene al iew
on he isk- e u n ela ionship. Many s udies ha e suppo ed he Capi al Asse P icing
Model, which es ablishes a posi i e ela ionship be ween isk (le e age) and e u n
(p o i abili y).
Las ly, he esul s ha e indica ed ha he deg ee o in e na ionaliza ion measu ed
by o eign sales as a pe cen age o o al sales has no signi ican impac on p o i abili y.
The bene i s and d awbacks o in e na ionaliza ion may ha e simila s eng hs. The
downsides o in e na ionaliza ion include cul u al di e ences, poli ical isk, exchange
a e isks, e ce e a. The bene i s o in e na ionaliza ion include economies o scale and
scope, access o new esou ces, di e si ica ion e ce e a. The inding ega ding he
in e na ionaliza ion a iable is simila o ha o o he pape s. The li e a u e sugges s
ha he e is a ela ionship be ween in e na ionaliza ion and e u n on asse s. Howe e ,
his ela ionship is no linea . Riahi-Belkaoui (1998) ound ha when he le el o
in e na ionaliza ion inc eases, he e is a luc ua ion in he a e o e u n on asse s,
ini ially dec easing, hen inc easing, and e en ually expe iencing a sligh dec ease.
Since he eg essions models used a e based upon linea ela ionships, i seems logical
ha he in e na ionaliza ion a iable is no signi ican in he es ed models.
THE RELATIONSHIP BETWEEN GLOBAL OIL PRICES AND THE PROFITABILITY …
23
6. Conclusion
Fi e ixed e ec s eg essions and one andom e ec eg ession ha e been
pe o med. The Hausman es has con i med ha he ixed e ec s eg essions a e
mo e ep esen a i e o his sample da a. The e o e, models 1, 2, 3, 5 and 6 a e he
mos ele an models o answe ing he esea ch ques ion.
All models on he whole sample (model 1, 2, 3 & 4) con i m ha he e is a
signi ican and posi i e ela ionship be ween he oil p ice and p o i abili y. Models 1,
2 and 3 show a posi i e ela ionship be ween he oil p ice and e u n on asse s, while
model 4 illus a es a posi i e ela ionship be ween he oil p ice and e u n on equi y.
Models 5 & 6 ha e shown ha he ela ion be ween oil p ices and p o i abili y is
dependen upon he p esence o oil and ene gy ela ed companies in he sample.
Model 5 did no include oil and ene gy ela ed companies in he sample, his esul ed
in an insigni ican ela ionship be ween he oil p ice and e u n on asse s. Con a y,
Model 6 only included oil and ene gy ela ed companies. The eg ession coe icien s
o model 6 showed a signi ican and s ong ela ionship be ween he global oil p ice
and p o i abili y.
The con ol a iable size (measu ed as he na u al loga i hm o ma ke
capi aliza ion) is signi ican o all models. The con ol a iable le e age is
insigni ican o he model measu ing he e ec s on e u n on equi y (model 4) and
he model excluding oil and ene gy ela ed companies (model 5).
The con ol a iable measu ing he deg ee o in e na ionaliza ion (pe cen o
o eign sales wi h espec o o al sales) is insigni ican in all models. I he deg ee o
in e na ionaliza ion is ans o med o a dummy a iable, i emains insigni ican .
The coe icien s o de e mina ion indica e ha model 6 can bes explain he
a ia ion on e u n on asse s wi hin i ms. The model accoun s o 32.26% o he
a ia ion wi hin i ms. Model 6 is also he bes in explaining he a ia ion o e u n
on asse s be ween i ms. The model accoun s o 8.64% o he a ia ion in e u n on
asse s be ween i ms.
Since all models on he whole sample a e signi ican and show ha he oil p ice
has a signi ican and posi i e impac on p o i abili y, he null hypo hesis can be
ejec ed:
Wim WESTERMAN, Luuk ENSING
24
H0: The e is no ela ionship be ween oil p ice and p o i abili y.
Addi ionally, hypo hesis 1 can be accep ed. Model 6 has shown ha he oil p ice
has much in luence on he p o i abili y o Du ch public companies ope a ing in he oil
and ene gy sec o .
H1: The e is a ela ionship be ween oil p ices and p o i abili y o companies in he
oil & ene gy sec o .
Las ly, hypo hesis 2 can only be accep ed pa ly. Model 1, 2, 3 & 4 ha e shown
ha he oil p ice posi i ely a ec s he p o i abili y o Du ch companies. Howe e ,
model 5 & 6 sugges ha his ela ionship is mos ly based upon he p esence o oil
and ene gy ela ed companies in he sample.
H2: The e is a ela ionship be ween oil p ices and p o i abili y.
7. Limi a ions and ecommenda ions
7.1. Limi a ions
Hono ing pionee wo k by And é Do sman, his s udy handles an in e es ing bu
limi ed opic: he ela ionship be ween global oil p ices and he p o i abili y o Du ch
public companies.
This s udy has shown ha he oil p ice has a posi i e impac on Du ch oil and
ene gy ela ed companies. Ou concep ual model can explain 4.31% o he a ia ion
in e u n on asse s o oil and ene gy ela ed companies in he Ne he lands. The model
co e s 8.38% o he a ia ion in e u n on equi y o all Du ch public companies.
The esea ch is done in a s aigh o wa d way, wi h li le suppo om he
li e a u e, bu wi h an in e es ing weak when non-ene gy companies a e le ou .
Al hough he indings o he s udy a e mos ly simila o he exis ing li e a u e, he
s udy can s ill su e om biases and impe ec ions. The s udy is p one o a couple
biases. Fi s ly, no ime lags a e used. This can esul in e e se causali y. Howe e ,
THE RELATIONSHIP BETWEEN GLOBAL OIL PRICES AND THE PROFITABILITY …
25
his bias is limi ed, since he oil p ice is mo e likely o a ec p o i abili y han ice
e sa.
Addi ionally, he s udy can su e om hi d a iable bias. Va iables such as he
gas p ice and he exchange a e can ha e an in luence on he ou come o he esul s.
Al hough he con ol a iables in his s udy a e selec ed upon he p eceden se by
se e al pape s, i is possible ha mo e con ol a iables in luence he ela ionship
be ween he oil p ice and p o i abili y.
Finally, i should be no ed ha some a iables did no ollow a no mal
dis ibu ion. To make he a iables mo e no mally dis ibu ed, na u al loga i hms
we e used o ans o m he a iables le e age and ma ke capi aliza ion. Ye , o he
independen a iables e u n on asse s and e u n on equi y, na u al loga i hms could
no be used o dec ease he skewness and ku osis. The independen a iables a e dual-
signed (nega i e and posi i e), and na u al loga i hms canno be aken om nega i e
numbe s.
7.2. Sugges ions o u he esea ch
The li e a u e e iew has indica ed ha he e ha e been se e al s udies on he
e ec s o he oil p ice on p o i abili y and he economy. Howe e , hese s udies lack
gene alizabili y. Coun y and company dependen ac o s may mode a e he
ela ionship be ween he oil p ice and he p o i abili y o companies. The esul s o
his s udy ha e shown ha he p esence o oil and ene gy ela ed companies in he
sample change he ela ionship be ween he oil p ice and p o i abili y. Ha ing a be e
unde s anding o which ac o s change he ela ionship be ween he oil p ice and
p o i abili y will help company manage s o imp o e hei o ecas s and make mo e
in o med decisions.
Fu he mo e, he esul s o he s udy ha e shown ha le e age nega i ely
in luences e u n on asse s. This iola es he Capi al Asse s P icing Model (CAPM).
The model sugges s ha mo e isk should be ewa ded by mo e e u n. Fu he
esea ch could in es iga e he su p ising esul s ha in his s udy, isk (measu ed by
le e age) was no ewa ded by e u n (measu ed by e u n on asse s and e u n on
equi y).
Wim WESTERMAN, Luuk ENSING
26
7.3. Manage ial implica ions
The esul s o his s udy p o ide key poin s ha manage s can use o hei bene i :
1. Manage s o oil and ene gy ela ed companies should closely analyse he
luc ua ions in he oil p ices. The manage s should de elop s a egies ha capi alize
on a ou able oil p ices o maximize hei company’s p o i abili y.
2. Manage s o non-oil and non-ene gy ela ed companies should no be excessi ely
conce ned abou luc ua ions in he oil p ice. The ocus o hese manage s should
p ima ily be on hei company’s indus y-speci ic ac o s.
3. Manage s should ca e ully manage he capi al s uc u e. Excessi e le e age can
nega i ely impac he e u n on asse s.
4. Manage s should ecognize he impac o company size on p o i abili y. La ge
companies ha e ce ain ad an ages such as g ea e access o esou ces and economies
o scale.
5. Manage s should ca e ully examine he po en ial bene i s and isks ela ed o
in e na ionaliza ion. While his can o e s a egic ad an ages, he e is no gua an ee
o inc eased p o i abili y.
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