Literature Review on the Topic: 'Influence of Oil Price on Alternative Energy Companies Valuation'

12 Pages Posted: 13 Apr 2010 Last revised: 2 Nov 2014

See all articles by Kevin L. Meyer

Kevin L. Meyer

Edinburgh University School of Law; St. Andrews University - School of Management; HEC Lausanne, UNIL; Pontifical University Comillas of Madrid - Department of Financial Management , ICADE; Wharton

Date Written: April 12, 2010

Abstract

Research Purpose: In order to build a financial product on a sound theoretical basis, I analysed the literature available on or related to the topic: “Alternative energy and Oil”. The aim is to verify the hypothesis of correlation between the variations of the price of oil and alternative energy companies‟ stock valuation.

Research Design: I searched on internet (Google scholar, SSRN, P&P) for papers related to the topic (selected by number of quotes), and went across a comprehensive analysis of the sub-topics present in the studies. I then looked at the similarities and contradictions in the conclusions and presented the regression methodology.

Findings: The available literature on the topic, to this day, seems to agree to a positive and significant Beta on the variation of the price of oil, when looking at the alternative energy companies‟ stock value.

Research Limitations: There are only three papers directly related to the specific topic, all the other analysed papers giving more depth to the subject but not answering the original question. Also, the turmoil of the financial market of the past years has provoked perturbations which make predictions less accurate.

Research Implications: In the papers analysed, all academics and professionals agree to the fact that alternative energy will develop in the future as a necessity. It is important for an investor to understand the role that this sub-sector will play in the future. Furthermore, the role of the variation of the price of oil on the value of alternative energy companies‟ stock value is important and has to be taken in account when investing in these companies.

Originality and Value: Due to the recency of the topic, very little conclusions have been made on the subject. By analysing the most recent and important papers on the broad topic and all the papers on the specific subject, I merged the conclusions of all the authors in this short paper.

By reading this literature review, an academic or professional will have a sound understanding of the role and determinants of the alternative energy market.

Keywords: alternative energy, review, literature, oil, price, beta, influence, price, financial, market, brent, energy

JEL Classification: Q42, C25

Suggested Citation

Meyer, Kevin L., Literature Review on the Topic: 'Influence of Oil Price on Alternative Energy Companies Valuation' (April 12, 2010). Available at SSRN: https://ssrn.com/abstract=1588160 or http://dx.doi.org/10.2139/ssrn.1588160

Kevin L. Meyer (Contact Author)

Edinburgh University School of Law ( email )

Old College
South Bridge
Edinburgh, Scotland EH8 9JY
United Kingdom

St. Andrews University - School of Management ( email )

North St
Saint Andrews, Fife KY16 9AJ
United Kingdom

HEC Lausanne, UNIL ( email )

Unil Dorigny, Batiment Internef
Lausanne, 1015
Switzerland

Pontifical University Comillas of Madrid - Department of Financial Management , ICADE ( email )

Alberto Aguilera, 23
Madrid, 28015
Spain

Wharton ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

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