Regulatory interventions in the US oil and gas sector: How do the stock markets perceive the CFTC's announcements during the 2008 financial crisis?

This paper analyzes the effects of the Commodity Futures Trading Commission's (CFTC) announcements on the stock returns of oil and gas companies around the financial crisis of 2008. Using event study methodology and regression analyses, we examine a set of 122 oil and gas related stocks listed...

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Bibliographic Details
Published in:Energy economics 2016-02, Vol.54, p.337-348
Main Authors: Berk, Istemi, Rauch, Jannes
Format: Article
Language:English
Subjects:
Commodities
Commodity futures
Commodity Futures Trading Commission
Commodity Futures Trading Commission (CFTC)
Companies
Earnings announcements
Economic crisis
Economics
Energy economics
Event study
Financial crisis
Government regulations
Markets
Natural gas
Natural gas utilities
Oil
Oil and gas industry
Oil and gas sector
Oil industry
Petroleum
Petroleum industry
Prices
Raw materials
Regression analysis
Regulation
Regulatory agencies
Return on investment
Securities markets
Speculation and manipulation
Stock exchanges
Stocks
Studies
United States
Volatility
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Summary:This paper analyzes the effects of the Commodity Futures Trading Commission's (CFTC) announcements on the stock returns of oil and gas companies around the financial crisis of 2008. Using event study methodology and regression analyses, we examine a set of 122 oil and gas related stocks listed in the New York Stock Exchange (NYSE) for 35 announcements. Our results indicate that CFTC announcements, depending on their content, can affect the stock returns of oil and gas companies. In particular, this is found to hold true during the period of high-volatility in oil prices, i.e., the period following Lehman Brothers failure. During this period, oil and gas related stock returns respond positively to most regulatory announcements, showing that the CFTC's regulatory interventions are perceived positively by the stock market. •We analyze the impact of the CFTC's regulatory announcements on US oil and gas related stocks.•We focus on the 2008 financial crisis to see if the interventions can reach the firms in crisis times.•We show that the announcements significantly affect the stock returns of oil and gas firms.•The effect is stronger during the period of high-volatility in oil prices.
ISSN:0140-9883
1873-6181
DOI:10.1016/j.eneco.2016.01.003