Price risk management and capital structure of oil and gas project companies: Difference between upstream and downstream industries

We estimate the causal effect of hedging the future price risk on the debt-to-equity ratio of oil and gas project companies. In particular, we examine how such an effect differs between the upstream and downstream industries, given that relative to downstream projects, upstream projects are exposed to the price risk to magnitude greater. With a sample of 230 loans made to oil and gas projects in 32 countries over the period 1997–2017, we...