A Quantitative Study of Oil Price Decrease and Bankruptcy Probability in Oil and Gas Companies

• Main Authors: Dini Rosdini, Rahardi Gita Nautika
• Format: Article
• Language: English
• Published: Prasetiya Mulya Publishing 2019-08-01
• Series: International Research Journal of Business Studies
• Subjects: Oil Price; Probability of Bankruptcy; Altman Z-Score
• Online Access: http://irjbs.com/index.php/jurnalirjbs/article/view/1181

The decrease in oil prices globally has an impact on the oil and gas company’s financial health. This study aims to provide empirical evidence about the effect of oil prices on the probability of bankruptcy in Indonesia, Singapore, and Australia using the probability of bankruptcy model of Altman Z-Score. The price of oil is measured by the price of Brent crude. Our sample is made of 20 oil and gas firms listed at the Indonesia Stock Exchange (IDX), the Australian Securities Exchange (ASX) and the Singapore Exchange (SGX) during the period of 2013-2015 selected through purposive sampling. This study is quantitative research with secondary data analyzed using simple regression model. The results of this study indicate that oil prices significantly influence the bankruptcy probability of oil and gas companies in Indonesia, Singapore, and Australia.