Risk spillovers among global oil & gas firms

Abstract

This study examines the risk spillovers among the world’s top oil & gas firms, accounting for the role of environmental fiscal policies, economic policy uncertainty (EPU), and regulatory quality. We find evidence of high risk spillovers among the oil & gas firms, being more intense at the extreme market states. More highly capitalised firms are mostly net transmitters of spillovers across the different market states, but less so at the extreme market states. Net pair-wisely, the network analysis suggests that spillovers are trivial when the market is normal, but complex when it is bullish. Finally, the spillovers are driven by environmental tax and expenditures, EPU, and regulatory quality heterogeneously. These results have important implications for suitable investment decisions and policy-making.