Study on the impact of crude oil price and macroeconomic factors on the stock prices of firms: The case of Malaysia for the period 1999-2019
This Research covers a study on the impact of crude oil price and macroeconomic factors on the prices of stocks of companies traded on Malaysia’s stock market. Because oil price in recent times have frequently fluctuated over a wide range, it is in the interest of stock market investors and obser...
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| Format: | Thesis |
| Language: | English English |
| Published: |
2022
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| Online Access: | http://ur.aeu.edu.my/939/1/Final%20Thesis_Adzim%20270222%20%281%29.pdf http://ur.aeu.edu.my/939/2/Final%20Thesis_Adzim%20270222%20%281%29-1-24.pdf http://ur.aeu.edu.my/939/ https://online.fliphtml5.com/sppgg/wsbg/?1658203867426 |
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| Summary: | This Research covers a study on the impact of crude oil price and macroeconomic
factors on the prices of stocks of companies traded on Malaysia’s stock market.
Because oil price in recent times have frequently fluctuated over a wide range, it is in
the interest of stock market investors and observers to comprehend if and how oil price
changes affect firm stock values, particularly when oil price rises. The New Theory of
the Firm postulates that profit maximization is the key objective of a firm, and that the
present value of a firm is derived from the future profits expected from the firm’s
business operation. Thus, notable changes in oil price (as an element in business
operation) are expected to result in counteractive decisions by the firm to maximize
profit and stock value. Concurrently, because the firm operates in the context of
economic conditions of a nation, value of the firm is also expected to be influenced by
macroeconomic factors. The study investigates the relationship between the stock
prices of twenty firms with crude oil price and macroeconomic factors over the 1999-
2019 period. Findings from the research show that oil price had significant negative
link with the stock prices of 15 percent the firms and significant positive relation with
25 percent of the firms, and no significant effect on 60 percent of the cases. Such varied
effects are explainable in the context of profit-maximization behaviour by firms as the
increased cost of the oil can be shifted to the oil users in various degrees. As such, the
firm–level demand conditions for their products are important. Similarly, the national
GDP (as the main macroeconomic factor) had mixed results due to its varied impact on
economic growth and business outlook. |
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