Oil Price Crisis and Bankruptcy Risk

Adhitya Agri Putra, D.P. Emrinaldi Nur, Ferdy Putra

Abstract


This research aims to examine the effect of the oil price crisis on bankruptcy risk. The sample consists of 9 oil and gas companies listed on the Indonesian Stock Exchange 2013-2019. The analysis method uses fixed-effect regression. The result shows that the oil price crisis increases bankruptcy risk, especially for companies with higher leverage. Furthermore, the oil price crisis reduces market value for companies with higher bankruptcy risk. It indicates that the oil price crisis brings performance for oil and gas companies to generate revenue, earnings, and cash flow that leads companies to insolvency condition.

Keywords: oil price crisis, bankruptcy risk, companies’ value.

JEL Classifications: G32, G33, H12

DOI: https://doi.org/10.32479/ijeep.11111


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