How does the fluctuation in oil prices impact the financial performance of alternative energy companies?

Abstract

My thesis investigates the impact of oil price volatility on the profitability of alternative energy companies. The dissertation focuses on two primary research questions: firstly, how does oil price volatility directly influence the profitability of alternative energy companies, and secondly, how does this relationship vary when controlling for firm-specific and macroeconomic variables. The empirical analysis employs a fixed effect regression approach with firm fixed effects, analyzing a global panel dataset of alternative energy companies between 2017 and 2022. The results reveal a positive and significant relationship between oil price volatility and alternative energy companies' Return on Assets ratios with a magnitude of 0,00209, 0,00218, and 0,00366, respectively, through 3 different scenarios. Overall, my models’ coefficients are jointly different from zero, indicating relevant explanatory power based on F-statistics. In conclusion, the thesis contributes to the understanding of the alternative energy sector's financial performance in response to oil price movements by adding a tangible measure of financial performance to existing literature that primarily focuses on green stock performance.

Date of Award	25 Jan 2024
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Geraldo Cerqueiro (Supervisor)