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The influence of peer effects, commodity prices and its hedging on corporate capital structure: Evidence from the oil and gas industry

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  • Barrachina-Fernández, Lucía
  • Sogorb-Mira, Francisco

Abstract

This paper investigates the influence of peer financial choices on the capital structure decisions of European and North American listed companies in the oil and gas sector. It also examines how commodity prices, particularly oil and natural gas prices, and their corporate hedging affect capital structure policies. The findings underscore the existence of peer effects in the oil and gas industry, indicating that companies consider their peers' financial decisions when determining their capital structure. Further analysis reveals that there is significant cross-country heterogeneity in capital structure peer effects conditional on financial and institutional development, and disclosure quality. Additionally, the research highlights that oil and natural gas prices, along with the hedging against these prices exposure, impact the capital structure of oil and gas companies, providing invaluable insights for industry practitioners and policymakers.

Suggested Citation

  • Barrachina-Fernández, Lucía & Sogorb-Mira, Francisco, 2024. "The influence of peer effects, commodity prices and its hedging on corporate capital structure: Evidence from the oil and gas industry," Energy Economics, Elsevier, vol. 140(C).
    • Handle: RePEc:eee:eneeco:v:140:y:2024:i:c:s0140988324007151
    DOI: 10.1016/j.eneco.2024.108007
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    More about this item

    Keywords

    Capital structure; Commodity price hedging; Natural gas price; Oil price; Peer effects;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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