The Impact of Inflation and Exchange Rate on the Firm Value of Petrochemical Companies Listed on the Tehran Stock Exchange
Keywords:
Inflation, Exchange Rate, Firm Value, Petrochemical IndustryAbstract
The petrochemical industry, as a key sector of Iran's economy, is influenced by macroeconomic variables, the identification of which is of significant importance. Accordingly, this study investigates the relationship between firm value and the variables of exchange rate and inflation by employing panel data regression models and systematic sampling of 15 petrochemical companies listed on the Tehran Stock Exchange during the period from 2018 to 2023. The findings indicate a positive and significant relationship between the firm value of petrochemical companies and both the exchange rate and inflation. Specifically, the increase in the exchange rate enhances the value of these companies by affecting foreign currency revenues and the central role of exports. Furthermore, the positive and significant effect of inflation on firm value can be attributed to the mechanism of product price adjustments and the increase in nominal revenues. These results underscore the necessity of considering macroeconomic variables in the valuation of petrochemical companies and in the decision-making processes of investors and policymakers.
References
A. A. Salihi, H. Ibrahim, and D. M. Baharudin, "Environmental governance as a driver of green innovation capacity and firm value creation," Innovation and Green Development, vol. 3, no. 2, p. 100110, 2024, doi: 10.1016/j.igd.2023.100110.
Z. Wu, S. Lin, T. Chen, C. Luo, and H. Xu, "Does Effective Corporate Governance Mitigate the Negative Effect of ESG Controversies on Firm Value?," Economic Analysis and Policy, 2023. [Online]. Available: https://www.sciencedirect.com/science/article/pii/S0313592623002990.
S. A. Saleh Aly, A. Diab, and S. I. Abdelazim, "Audit quality, firm value, and audit fees: does audit tenure matter? Egyptian evidence," Journal of Financial Reporting and Accounting, 2023, doi: 10.1108/JFRA-04-2023-0203.
K. Nguyen Vinh et al., "Related party transactions and firm value in an emerging market: Does corporate social responsibility matter?," Cogent Economics & Finance, vol. 11, pp. 145-176, 2023. [Online]. Available: https://doi.org/10.1080/23322039.2023.2186036.
Y. D. Ferdiansah, "The Influence of Profitability, Leverage and Free Cash Flow on Firm Value With Dividend Policy as a Moderation Variable (Empirical Study of Consumption Goods Industry Sector Companies on the IDX Period 2019–2021)," pp. 68-74, 2023, doi: 10.2991/978-94-6463-346-7_14.
O. Faraji, F. Jannati Daryakenari, K. Mansouri, and F. Younesi Mati, "Social responsibility and firm value: The moderating role of earnings management," Scientific Journal of Social Capital Management, vol. 7, no. 1, pp. 25-58, 2020.
Z. Guo, S. Hou, and Q. Li, "Corporate Social Responsibility and Firm Value: The Moderating Effects of Financial Flexibility and R&D Investment," Sustainability, vol. 12, p. 8452, 2020, doi: 10.3390/su12208452.
M. H. Golshan, A. H. Mazini, and R. Najjarzadeh, "The Impact of Exchange Rate Shocks on the Performance of Active Energy Companies in Tehran Stock Exchange: Case Study of Petrochemical and Oil Products Industries," (in English), Strategic Research in Budget and Finance, vol. 1, no. 3, pp. 11-43, 2022.
S. Houshmandi, S. S. Hosseini, A. Memarnejad, and F. Ghaffari, "The Effect of Exchange Rate Volatility on the Price Index of Petroleum Products in Tehran Stock Exchange Using MS-VAR Model," (in English), Monetary and Financial Economics, vol. 28, no. 22, pp. 153-177, 2021, doi: 10.22067/mfe.2022.71498.1097.
M. Nematian, "Studying the Relationship between Company Value and Inflation and Exchange Rate Using Tobin’s Q Index in Tehran Stock Exchange," in Second National Conference on Petroleum Engineering of Iran, 2016.
H. R. Tejesh, "Impact of Inflation and Exchange Rate on Stock Market Returns in India: An ARDL Approach," (in English), Theoretical & Applied Economics, vol. 31, no. 2, pp. 25-36, 2024, doi: 10.2139/ssrn.4889476.
H. Hiendrawati, A. Mas'ud, U. Kalsum, and M. Nur, "The Effect of Inflation, Interest Rates and Exchange Rates on Company Value (Case Study on Registered Banking Institutions on the Indonesia Stock Exchange)," (in English), Syntax Idea, vol. 6, no. 6, pp. 2886-2898, 2024, doi: 10.46799/syntax-idea.v6i6.3915.
Downloads
Published
Submitted
Revised
Accepted
Issue
Section
License
Copyright (c) 2025 Mahdi Alimadadi (Author); Hadi Mohammadi Mohammadi; Mohammad Hasan Saadatian Farivar (Author)
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
