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Shifting sentiments in Firm Investment: An Application to the Oil Industry

Listed author(s):
  • Mohn, Klaus

    ()

    (University of Stavanger)

  • Misund, Bård

    (University of Stavanger)

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://www1.uis.no/ansatt/odegaard/uis_wps_econ_fin/uis_wps_2009_12_misund_mohn.pdf
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Paper provided by University of Stavanger in its series UiS Working Papers in Economics and Finance with number 2009/12.

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Length: 21 pages
Date of creation: 01 Apr 2008
Handle: RePEc:hhs:stavef:2009_012
Contact details of provider: Postal:
University of Stavanger, NO-4036 Stavanger, Norway

Web page: http://www.uis.no/research/economics_and_finance

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