IDEAS home Printed from https://ideas.repec.org/h/spr/advbcp/978-94-6463-408-2_50.html

Financial Characteristics and Risk Strategy Analysis of Oil Giant Companies under The Background of Global Economic Recession

In: Proceedings of the 9th International Conference on Financial Innovation and Economic Development (ICFIED 2024)

Author

Listed:
  • Qingrui Luo

    (Xiamen University Malaysia, School of Economics and Management)

Abstract

In the context of the evolving energy industry, this study provides a comparative analysis of two industry giants, ExxonMobil and Royal Dutch Shell. The study aims to examine their financial health, with a particular focus on three key metrics: leverage, weighted average cost of capital (WACC), and asset Beta (βa). The study adopted quantitative research methods to carefully collect and analyze the financial data of the two companies. The results revealed striking differences in their financial characteristics. ExxonMobil is more leveraged, with a WACC about 4 percent higher than Royal Dutch Shell and an asset beta of 1.01, indicating greater sensitivity to market volatility. In contrast, Shell has lower leverage, a low WACC and an asset beta of 0.49, reflecting a more stable market reaction. These results underscore the critical importance of aligning financial structures with strategic objectives. ExxonMobil’s conservative financial strategy may help reduce risk, while Shell’s lower cost of capital may provide a competitive advantage in seeking investments. In conclusion, this study reveals the critical role of financial dynamics in the energy sector, providing valuable insights for investors and industry stakeholders. Future research may explore additional financial metrics and industry-specific factors to further enrich our understanding of these companies’ financial strategies.

Suggested Citation

  • Qingrui Luo, 2024. "Financial Characteristics and Risk Strategy Analysis of Oil Giant Companies under The Background of Global Economic Recession," Advances in Economics, Business and Management Research, in: Khaled Elbagory & Zefu Wu & Hamdan Amer Ali Al-Jaifi & Shafie Mohamed Zabri (ed.), Proceedings of the 9th International Conference on Financial Innovation and Economic Development (ICFIED 2024), pages 442-449, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-408-2_50
    DOI: 10.2991/978-94-6463-408-2_50
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a
    for a similarly titled item that would be available.

    More about this item

    Keywords

    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:advbcp:978-94-6463-408-2_50. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.