Oil price uncertainty and stock price informativeness: Evidence from investment-price sensitivity in Vietnam

Abstract

We study the effects of oil price uncertainty (OPU) on stock price informativeness based on investment-price sensitivity. Using Data of 200 companies traded on stock exchange in Vietnam (VN-Index) from 2008 to 2021, we find a positive relationship between OPU and the strength of Tobin’sq (a standardized measure of prices) for predicting investment opportunities. Besides TobinQ, price - investment sensitivity (INV) is also affected by Oil price uncertainty, cash flows, marketable securities, firm size, sales volatility, financial constraints and financial constraints and firm investment behavior. In this situation, price - investment sensitivity increases as companies with higher cash flow have more cash available to finance their investment activities, larger size, more market shares, high sale volatility,... These findings indicate that future investment choices made by businesses across a range of industries will be impacted by the OPU's crude oil price volatility.