Panel Data Analysis to Investigate Factors Influencing Profitability: Empirical Study on Indian Oil and Gas Companies

The purpose of this study is to investigate the determinants of profitability of oil and gas companies in India using inferential statistics and advanced econometric models, with a focus on unbalanced panel data regression analysis. The study is conducted using the data for the period of 1989–2022 of all the listed companies on the Bombay Stock Exchange, as per the pre-defined set of companies in ProwessIQ database. A total of eight determinants are studied, including six micro factors and two macro factors. These are examined corresponding to profitability, which is proxied as firm performance. Along with firm-specific determinants, the influence of macroeconomic indicators is also taken into consideration to study the. A multivariate data analysis approach was used to determine the nature of the association. We used fixed effect model (FEM) and random effect model (REM) in order to overcome the problem of endogeneity in the OLS regression technique. The findings revealed that firm size, tangibility, growth opportunities, exchange rate, and crude oil prices have a significant relationship with profitability, while leverage, liquidity, and non-debt tax shield do not impact profitability significantly.