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Investigating Effect of Oil Prices on Firm Value with Emphasis on Industry Type
Authors: Ali DADASHI, Asgar PAKMARAM, Mahmoud MOEIN al-DIN
Number of views: 619
The most important decision criterion for the investors and creditors to select the most appropriate
investment option are stock price and firm value. Given the high dependence of Iran's economy to the oil
industry and oil export, which constitute large portion of Iran’s GDP, the purpose of this research is to
study the impact of oil prices on the value of listed firms in Tehran Stock Exchange. In order to achieve
this goal, a major hypothesis and three sub-hypotheses were formulated. To test the hypotheses, the
Spearman’s correlation test was used. In this study, to measure the value of the firm, three indicators are
used: Tobin’s Q, normalized price per share and the created value for shareholders. Target population of
this study includes all listed companied in Tehran Stock Exchange. Using the systematic elimination
sampling, 62 firms were included in the sample for this study. The research’s period is from 2003 to 2013.
About the impact of oil prices on the value of the firm, results of Spearman’s correlation test does not
confirm significant effect of oil prices on firm value. Based on Tobin’s Q, oil prices was not influential on
12 industries of 16 industries and 34 firms of 62 firms. Based on normalized price per share, oil prices was
not influential on 1 industry of 16 industries and 8 firms of 62 firms. Based on the created value for
shareholders, oil prices was not influential on 2 industries of 16 industries and 8 firms of 62 firms.