Date of Award
2016
Document Type
Thesis
Degree Name
Bachelor of Arts
Department
Economics
First Advisor
Dr. David North
Abstract
I examine companies focused on the exploration, production and exploitation of oil and gas assets to test whether there is a significant relationship between a firm’s debt burden and its production decision. I am most interested in debt’s effect on a firm’s price elasticity of supply as this would allow me to conclude how a highly levered firm would react to changes in price relative to other firms. I use data from 81 publicly traded exploration and production companies with varying degrees of leverage over the last ten years. This time frame captures two price cycles for the oil and gas markets. What I find is that there does not appear to be a significant relationship between a company’s debt burden and its price elasticity of supply. This result emerges both generally and in a low-price environment.
Recommended Citation
Levine, Michael, "The effects of financial leverage on the output decision of an exploration and production company" (2016). Honors Theses. 848.
https://scholarship.richmond.edu/honors-theses/848