Text

theses

All the three essays in my dissertation discuss issues in the oil and gas sector.
The first essay studies civil war, conflicts and vandalism in resources enriched countries, specifically in the oil and gas sector in sub-Saharan African countries, by examining select literature. It argues that, vandalism, conflict and civil war is prevalent in these countries because of the dissatisfaction of indigence who reside in the extraction area. Evaluation of how oil and gas revenue is distributed under the Sovereign Wealth Fund (SWF) of these countries suggests that these revenues are not managed, properly based on transparency and accountability rankings. This paper advocates for the management of the SWF to be outsourced so that the returns can be used to develop the country. In this essay, I propose that the Charter City model developed by Paul Romer be applied. The main concept of this model is about rules. Rules do matter, and when proper rules are put in place, people get motivated to come to come to the city to create wealth, save and invest. This is a new dimension which I am advocating for Sub-Saharan Africa oil producing countries to adopt in managing the revenue accrued from natural resources, especially in the oil and gas sector.
The second essay focuses on profitability and valuation of firms when the future path of government policy is uncertain. Specifically, I examine whether the economic risk caused by gridlock during periods of divided government influences profitability and valuation of firms that operate in the oil and gas sector. Using U.S. publicly traded oil and gas firms from the Compustat database covering the period 1989 to 2016, the results show that firms are profitable when there is a divided government; however, there is no association between divided government and firm valuation. I find that firms are less profitable under unified government. Further, small Texas firms and those that operate in the crude petroleum and natural gas industry are less profitable in the periods of Democratic control. Large firms tend to be profitable during Republican control and small firms are more profitable when there is a divided government. In sum, political institutional factors are with the profitability of firms that operate in the oil and gas sector; however, this relation differs across firm size and industry.
The third essay focuses on corporate investment behavior of firms in the oil and gas sector during periods of divided government. The general thrust of this essay is to consider whether the effect of political control on the long-term calculations involved in investment decisions differs from the effect on profitability I examine in the second essay. In the third essay, I also investigate investment behavior during periods when one party controls both the executive (i.e. White House) and the legislative (i.e. the House and the Senate) branches of government, with the aim of determining how variations in political ideologies and the interaction of these ideologies influence investment in this sector. Using U.S. publicly traded oil and gas firms from the Compustat database covering the period 1989 to 2016, I find that these firms spend more on R&D during periods of divided government. They spend less when the Republican Party controls both the executive and legislative branches. I find that the effect of Republican control on R&D spending differs across industries in the sector. Further, there is evidence that small Texas firms and firms that operate in the crude petroleum and natural gas industry spend less in investment in tangible assets when the Democratic Party controls both the executive and the legislative branches. I find that small Texas firms invest more under divided government. Taken together, I find that political institution (i.e. government control type) is associated with investments in tangible assets and R&D by oil and gas firms.

ETD_9248

Ph.D.

Includes bibliographical references

by Irene Iris Akaab

doi:10.7282/t3-s8kt-m333

ETD doctoral

The author owns the copyright to this work.