Psychological oil price barrier and firm returns

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Abstract

In this paper, we investigate the psychological barrier effect induced by the oil price on firm returns when the oil price reaches US$100 or more per barrel. We find evidence of the negative effect of the US$100 oil price barrier for: (a) the entire sample of 1559 firms listed on the American stock exchanges; (b) both foreign and domestic firms, with domestic firms significantly more affected; (c) the 10 different sizes of firms, with the smaller firms less affected compared to the larger firms; and (d) 17 sectors of firms, with firms in the utilities, mining, and administration sectors being the least affected.

Original languageEnglish
Pages (from-to)318-333
Number of pages16
JournalJournal of Behavioral Finance
Volume15
Issue number4
DOIs
Publication statusPublished - 2 Oct 2014
Externally publishedYes

Keywords

  • Firm returns
  • Oil price
  • Psychological barrier

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