The Relationship Between Oil Price and Airline Stock Price

• Main Author: Saleh, Mousa Sharaf Adin Hezam
• Format: Thesis
• Language: English; English
• Published: 2012
• Subjects: HB Economic Theory
• Online Access: https://etd.uum.edu.my/3550/1/s808861.pdf; https://etd.uum.edu.my/3550/7/s808861.pdf; https://etd.uum.edu.my/3550/

This study aims to examine the relationship between oil prices and airline stock prices. with the increase of threats of oil price fluctuations and rising energy price for airline companies, it is important to important to consider oil as a pricing factor in asset pricing models. Furthermore the study contributes to literature by demonstrating how the relationship between oil price and stock price vary among companies depending on their characteristics. Two multiple regression models are executed to investigate the nature of the relationship between oil price and airline stock price. The models consider crud oil denominated by daily OPEC basket prices, and the data for 40 airline companies from 27 countries. The findings suggest that there is a significant negative relationship between airline stock prices and both oil price and exchange rate. The findings also suggest that there is a significant positive relationship between firm size and profitability and the effect of oil prices, as well as there is a significant negative relationship between operating leverage and liquidity and the effect of oil price. Conversely, there is a negative relationship between financial leverage and the effect of oil price but not significant and as for the operating efficiency the finding show a positive relationship but not significant too.