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Shifting sentiments in firm investment: an application to the oil industry

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  • Klaus Mohn
  • B�rd Misund

Abstract

Recent developments in the oil and gas industry suggest that investment behaviour is not necessarily changeless over time. We propose a micro-econometric procedure to investigate the stability of investment behaviour at the firm level. Applying system Generalized Method of Moments (GMM) on a panel data set for 253 oil and gas companies over 14 years, we estimate accelerator models of investment with error-correction. Robust econometric evidence indicates a structural break in oil and gas investment in 1998. The process of capital formation over the last few years is more flexible than before, with significant and material changes in the role of explanatory factors like cash flow and uncertainty.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/09603107.2010.534060
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Financial Economics.

Volume (Year): 21 (2011)
Issue (Month): 7 ()
Pages: 469-479

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Handle: RePEc:taf:apfiec:v:21:y:2011:i:7:p:469-479

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Cited by:
  1. Aune, Finn Roar & Mohn, Klaus & Osmundsen, Petter & Rosendahl, Knut Einar, 2009. "Financial market pressures, tacit collusion and oil price formation," UiS Working Papers in Economics and Finance 2009/14, University of Stavanger.

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