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Robustness of firm-specific and macroeconomic determinants of exploration investments: Implications from Egyptian oil & gas industry

Tarek Eldomiaty (Faculty of Business Administration and International Trade, Misr International University, Cairo, Egypt)
Ibrahim Safwat Lotfy (BG Group, Cairo, Egypt)
Mohamed Rashwan (Faculty of Business Administration, Economics and Political Science, British University in Egypt, Cairo, Egypt)
Mohamed Bahaa El Din (Graduate School of Business, Arab Academy for Science, Technology & Maritime Transport, Alexandria, Egypt)

Journal of Economic and Administrative Sciences

ISSN: 1026-4116

Article publication date: 21 November 2016

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Abstract

Purpose

The uncertainty that surrounds oil and gas exploration environments call for an examination at different angles. In terms of robustness, the purpose of this paper is to focus on three performance measurements: the amount of exploration investments, the growth rate of exploration investments, and the value at risk (VaR) of exploration investments.

Design/methodology/approach

The study utilizes the properties of discriminant analysis for deriving Z-score models that can be used for monitoring firms’ performance. A cointegration analysis is utilized as well in order to examine the level of cointegration between predictors of each performance measure. The sample includes annual data for 41 firms (local and multinational) working in the oil and gas industry in Egypt for the period 2009-2014.

Findings

The results show that amount and growth of exploration investment are quite robust performance measures in the oil and gas industry; VaR of exploration investment is sporadic as it firm-specific; and GDP, capital expenditure and operating expenditure are quite relevant for managing and monitoring growth of exploration investments.

Originality/value

The study offers robust evidence that amount and growth of exploration investment are quiet relevant for measuring firm performance in the oil and gas industry.

Keywords

Citation

Eldomiaty, T., Lotfy, I.S., Rashwan, M. and Bahaa El Din, M. (2016), "Robustness of firm-specific and macroeconomic determinants of exploration investments: Implications from Egyptian oil & gas industry", Journal of Economic and Administrative Sciences, Vol. 32 No. 2, pp. 137-159. https://doi.org/10.1108/JEAS-02-2016-0004

Publisher

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Emerald Group Publishing Limited

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