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A Fundamental Analysis Approach to Oil and Gas Firm Valuation
Author(s) -
Quirin Jeffrey J.,
Berry Kevin T.,
O’Brien David
Publication year - 2000
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/1468-5957.00335
Subject(s) - equity (law) , earnings , valuation (finance) , economics , financial economics , petroleum industry , stock (firearms) , fossil fuel , market value , econometrics , book value , return on equity , business , finance , stock exchange , engineering , mechanical engineering , political science , law , environmental engineering , waste management
Most fundamental analysis studies have focused on fundamentals selected by a data‐driven approach on large samples of firms from numerous industries. This paper reports the results of a fundamental analysis of a single industry, the US oil and gas exploration and production industry, using variables identified by industry financial analysts. The results demonstrate a significant relationship between a number of the fundamentals with both the market value of equity and cumulative stock return. The results also suggest that the fundamentals provide incremental information beyond earnings, change in earnings, and book value of equity when explaining equity values and stock returns.