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Oil Prices and Firm Returns in an Emerging Market

Author

Listed:
  • Cakan, Esin

    (University of New Haven)

  • Demiralay, Sercan

    (Nottingham Trent University)

  • Ulusoy, Veysel

    (Yeditepe University, Istanbul)

Abstract
This study examines the oil price effect on Turkish stock market as an emerging country on firm level data. After controlling short term interest rate, nominal exchange rate and crude oil price, we find that firms behave differently to a change in oil prices. The findings include these: i) variations in oil prices do not significantly affect Turkish firm returns. Out of 153, only 38 firms are affected significantly by oil price after controlling exchange rate and interest rate; ii) oil prices influence stock returns of Turkish firms, suggesting that under reaction and gradual information diffusion hypotheses may hold. iii) small and middle-sized firms are more affected negatively from oil price changes, where large-sized firms affected more positively. The empirical findings of this study have potential implications and offer significant insights for both practitioners and policy makers.

Suggested Citation

  • Cakan, Esin & Demiralay, Sercan & Ulusoy, Veysel, 2021. "Oil Prices and Firm Returns in an Emerging Market," American Business Review, Pompea College of Business, University of New Haven, vol. 24(1), pages 166-187, May.
    • Handle: RePEc:ris:ambsrv:0031
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    More about this item

    Keywords

    Oil Prices; Emerging Markets; Firm Returns; Sectors; Herd Behavior;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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