Очікувані наслідки інвестицій в охорону навколишнього середовища для частки ринку нафтової компанії
This research is aimed at examining a possibility of using environmental investment as an oil company’s strategy for increasing its market share. The numeric data of environmental investment and share price in oil market are analyzed with the method of econometrics [1], and then the com-puter simula...
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System research and information technologies| _version_ | 1867334251377065984 |
|---|---|
| author | Matsuki, Y. Bidyuk, P. I. Danylov, V. J. Yevtushenko, K. I. |
| author_facet | Matsuki, Y. Bidyuk, P. I. Danylov, V. J. Yevtushenko, K. I. |
| author_institution_txt_mv | [
{
"author": "Y. Matsuki",
"institution": null
},
{
"author": "P. I. Bidyuk",
"institution": null
},
{
"author": "V. J. Danylov",
"institution": null
},
{
"author": "K. I. Yevtushenko",
"institution": null
}
] |
| author_sort | Matsuki, Y. |
| baseUrl_str | http://journal.iasa.kpi.ua/oai |
| collection | OJS |
| datestamp_date | 2016-07-21T13:43:12Z |
| description | This research is aimed at examining a possibility of using environmental investment as an oil company’s strategy for increasing its market share. The numeric data of environmental investment and share price in oil market are analyzed with the method of econometrics [1], and then the com-puter simulation is carried out with the method of system dynamics [2]. Yearly data are collected between 2003 and 2011 from open information sources of 12 major oil companies in 8 countries, on their net incomes, share prices, environmental investments, social investments, the emitted amounts of 4 types of air pollutions, and the volumes of spilled oil into the oceans. Upon the results of the investigations, it is found that there is a possibility that a certain degree of environmental investment may increase the market share of a company; and, there is a possibility for strategic environmental investment, while still increasing the market share. |
| first_indexed | 2025-07-17T10:19:34Z |
| format | Article |
| fulltext |
Y. Matsuki, P.I. Bidyuk, V.J. Danylov, K.I. Yevtushenko, 2015
84 ISSN 1681–6048 System Research & Information Technologies, 2015, № 3
UDC 519.004.942
EXPECTED EFFECT OF ENVIRONMENTAL INVESTMENT
ON MARKET SHARE OF OIL COMPANY
Y. MATSUKI, P.I. BIDYUK, V.J. DANYLOV, K.I. YEVTUSHENKO
This research is aimed at examining a possibility of using environmental investment
as an oil company’s strategy for increasing its market share. The numeric data of
environmental investment and share price in oil market are analyzed with the
method of econometrics [1], and then the computer simulation is carried out with the
method of system dynamics [2]. Yearly data are collected between 2003 and 2011
from open information sources of 12 major oil companies in 8 countries, on their net
incomes, share prices, environmental investments, social investments, the emitted
amounts of 4 types of air pollutions, and the volumes of spilled oil into the oceans.
Upon the results of the investigations, it is found that there is a possibility that a cer-
tain degree of environmental investment may increase the market share of a com-
pany; and, there is a possibility for strategic environmental investment, while still
increasing the market share.
INTRODUCTION
In the oil industry of the world, the companies’ goal is to sell more oil in the mar-
ket to gain more net income; but, the companies also invest on environmental pro-
tections and social development. The purpose of this paper is to indicate the ex-
pected effects of the environmental investment to the oil sales. Data are collected
between 2003 and 2011 from 12 major oil companies’ reports through open in-
formation sources, as shown in Table 1, in Brazil, France, Italy, Netherlands,
Norway, Russian Federation, the United Kingdom, and the United States of
America on their net incomes, share prices, environmental investments, social
investments, the emitted amounts of carbon dioxide, sulfur oxides, and methane,
as well as the volumes of spilled oil into the oceans. The descriptive statistics of
those variables are shown in table 2–3.
T a b l e 1 . Selected oil companies for the data analysis
Company Location of
Headquarters Website
ВР London, England http://www.bp.com/extendedsectiongenericarticle.do?categoryId
=9039692&contentId=7072683
Lukoil Moscow, Russia http://www.lukoil.ru/new/finreports/2012
Tatneft
Almetievsk,
Tatarstan, Russia
http://www.tatneft.ru/wps/wcm/connect/tatneft/portal_rus/infoact
sinvest/otchetnost_po_rsbu/
Total
Tour Total, Paris,
France
http://www.total.com/fr/investisseurs-
institutionnels/publications/documents-annuels-601405.html
Shell
The Hague, Nether-
lands
http://www.shell.com/global/aboutshell/investor/financial-
information/annual-reports-and-publications/archive.html
ENI Rome, Italy
http://www.eni.com/en_IT/investor-
relation/reports/reports.page?type=bil-rap
Chevron
San Ramon,
California, the USA http://www.chevron.com/news/publications/#b2
Expected effect of environmental investment on market share of oil company
Системні дослідження та інформаційні технології, 2015, № 3 85
Table 1 (continued)
Petrobras Rio de Janeiro, Brazil http://www.investidorpetrobras.com.br/en/financial-results/
Exxon
Mobil
Irving, Texas,
the USA
http://ir.exxonmobil.com/phoenix.zhtml?c=115024&p=
irol-reportsfinancial
Gazprom Moscow, Russia http://www.gazprom.ru/investors/reports/2011/
Rosneft Moscow, Russia
http://www.rosneft.ru/Investors/statements_and_presentations/
annual_reports/
Statoil Stavanger, Norway
http://www.statoil.com/en/InvestorCentre/AnnualReport/
Pages/default.aspx
T a b l e 2 . Descriptive statistics of the selected data
Statistics
Net income
(million US
dollars)
Social investment
(million US dollars)
Environmental
investment
(million US dollars)
NOX emission
(1000 tons)
SO2 emission
(1000 tons)
Mean 13645 197.7 1313 110.5 91.93
Median 12322 132.2 879.8 115.7 74.86
Maximum 45220 784.5 18400 404.0 283.0
Minimum –3324 6.716 19.57 1.070 1.300
Std. Dev. 9969 186.1 2149 81.80 72.51
Skewness 0.926 1.480 5.243 0.446 0.579
Kurtosis 3.669 4.415 39.23 2.988 2.618
Obs. 108 108 108 108 108
Note : Std.Dev. — standard deviation. Obs. — number of observations.
T a b l e 3 . Descriptive statistics of the selected data
Statistics
Methane
emission
(1000
tons/year)
CO2 emission
(1000
tons/year)
Percentage
of female
management
(%)
Oil spill
(Barrel/year)
Water
consumption
(million m3)
Share price
(US dollars)
Mean 458.0 75550 22.72 13390 189.8 48.96
Median 173.1 63190 22.80 7063 181.8 38.70
Max. 1826 145500 42.54 112900 1015 198.3
Min. 22.16 40850 10.48 276.7 6.000 0.3630
Std.Dev 580.3 27870 7.491 18580 160.3 45.42
Skewess 1.181 1.146 0.659 3.225 2.417 1.422
Kurtosis 2.565 3.070 3.297 16.19 13.48 4.792
Obs. 108 108 108 108 108 105*
Note: Std.Dev. — standard deviation. Obs. — number of observations. Number of the obser-
vations for the share price is 105, while others’ are all 108, because of 3 missing observations in the
share price database.
METHODOLOGY
For the analysis, at first, the correlations [1] are calculated; and, multivariable re-
gression analysis [1] is made to investigate the strength of the relation between
the environmental investment and the share price; then the time-series analysis [1]
on the share prices is made on selected companies in order to check the continuity
share price with the investment. Then, the logic of environmental investment is
tested by computer simulation with the method of system dynamics [2].
For the analysis in the econometrics, the share price is considered as a surro-
gate for the size of market share; and, in the computer simulation of system dy-
Y. Matsuki, P. Bidyuk, V.J. Danylov, K.I. Yevtushenko
ISSN 1681–6048 System Research & Information Technologies, 2015, № 3 86
namics, the proportions of the number of companies who take specific strategy in
environmental investment are used as the indicator of the market share. The size
of market share and the value of share price are not proportional, however when
a company increases the sales of its product in a market, leading to the larger
market share, the share price also increases because the investors (buyers of the
company’s stock) wish to buy the company’s stock more, leading to the higher
share price.
The basic methodology of econometrics [1]. First consider estimating
the coefficients of a linear model.
At first, the average value )(xE of each variable x is calculated:
n
i
ixnxE
0
/1)( ,…, , (1)
where ,,,2,1 ni n is the total number of the sample of the variable, x .
Then, the variance )(xV and covariance ),( yxC of the variables x and y
are calculated:
,)()()( 222
xxExExV (2)
xyyxEyxC )(),( ** , (3)
where ),(* xExx )(* yEyy , y is also an independent variable.
Then, a linear regression model is constructed as follows.
In case of 3 independent variables, the regression model is written as the fol-
low:
4433221 XcXcXccY , (4)
where Y is dependent variable, jX are independent variables, and 1c and jc are
constant values, where, .4,3,2j
The values of those coefficients are obtained by the following equations,
which are obtained by an optimization of )( 4433221 XcXcXccYU [1].
)()()()( 4433221 XEcXEcXEcYEc . (5)
)....)(.{(
342344343 4
222
2 YXXXXXYXXXXXc
/)}...)(...(
243344234332
22
YXXXYXXXXXXXXX
)...)(./{(
42324324343
2222
XXXXXXXXXXX
)}...)(...(
42433244234332
22
XXXXXXXXXXXXXX . (6)
)...)(.{(
3223243242
2222
3 YXXYXXXXXXXXc
/)}....)(...(
4223424224232
2
YXXXYXXXXXXXXXX
).)(.../{( 2222
32324324342 XXXXXXXXXXX
Expected effect of environmental investment on market share of oil company
Системні дослідження та інформаційні технології, 2015, № 3 87
)}...)(...(
43323424324232
22
XXXXXXXXXXXXXX . (7)
)...)(...{(
322324332342
22
4 YXXYXXXXXXXXXXc
/)}....)(.(
4323423232
222
YXXXYXXXXXXX
)...)(.../{(
43242324332342
22
XXXXXXXXXXXXXX
....)(.( 2222
43243423232 XXXXXXXXXXX (8)
Correlation coefficients. For the regression model, the independent vari-
ables iX are independent from each other. Therefore, before formulating the
model equation (4), the correlation )( between each pair of the variables need to
be investigated by the following equation:
ji
ji
XX
XX
ji
ji
j
XVXV
XXC
.
)()(
),(
. (9)
where .ji
Fitting of the regression model in the data. After obtaining the correla-
tions and the coefficients, 321 ,, ccc and ,4c the fitting of the model equation
(4) on the given data of ix and Y needs to be investigated by the following pro-
cedure:
Calculate the predicted value of Y (i.e.,
)Y with the following equation:
j
k
j
j xccY
2
1 . (10)
where .,,3,2 Kj
Calculate the value of 2R by the following equation:
,
)(
)(
2
1
2
12
YY
YY
R
n
i
i
n
i
i
(11)
where
n
i
ixnY
0
/1 , ni ,,2,1 and n is the total number of the samples
of the variable .ix
The value of 2R represents the fitting of the model upon the given data, and
when ,0.12 R it is the perfect match, while the level of the matching is lower
when the value of 2R is lower. In practice, if ,8.02 R the matching is signifi-
cant. However, the threshold value depends on the topic and the data of the con-
cerned research question, therefore the values of 2R need to be considered on the
comparative manner.
Y. Matsuki, P. Bidyuk, V.J. Danylov, K.I. Yevtushenko
ISSN 1681–6048 System Research & Information Technologies, 2015, № 3 88
Basic method of time series analysis [1]. When the number of the observa-
tions of a variable ty in time series t is n , the j -th auto-covariance of ty is
,),( jttj yyC (12)
where )1(,,3,2,10 nj and .)(),(0 ttt yVyyC
The j -th autocorrelation is
.
)()(
),(
jtt
jtt
j
yVyV
yyC
(13)
The 1st order approximation of the conditional expected value of ty is
,)( 11
*
ttt yyyE (14)
where
)1()()1()()( 2
2
*
1
*
2
**
1
nmynmymy
n
t
tt
n
t
t ,
,)1( *m and
n
t
t nym
2
* )1( ,
n
t
t nym
2
1
** .)1(
Method of system dynamics [2]. The system dynamics simulation assumes
“costs” and “gains” of strategies. If one company who follows strategy i meets
another company who follows strategy ij, the gain will be ;, jir while, if jir , is
negative, it will be a loss. The values jir , are given by the income )(U minus the
cost for environmental investment )(Ce , and the cost for penalty or recovery ac-
tions at accidents )(Cp . When a company applies the strategy i at time of t, the
average gain )(tyi is calculated by
,)()( , tprty j
j
jii (15)
where ip is the proportion (% 100) of the companies in the market, who fol-
lows the strategy .i
The mean gain by all the strategies is calculated by
,)()()( tptyty i
i
i (16)
then, the growth of the subpopulation who follows the strategy i is modeled as
proportional to the difference between its average gain ))(( ty and the overall
mean gain of all strategies ,))(( ty i.e.
)()()( tytytF ii . (17)
Therefore, the relative growth of the strategy is written as the follow:
)](1)[()( ttFtpttp iii , (18)
then
,)()(
)()(
tFtp
t
tpttp
ii
ii
(19)
Expected effect of environmental investment on market share of oil company
Системні дослідження та інформаційні технології, 2015, № 3 89
ii
iii
t
Fp
dt
dp
t
tpttp
)()(
lim
0
. (20)
The relative growth of the proportion of the company with the strategy i is:
k
kkiiiiiii
i pypypyypFp
dt
dp
)(
)()()( ,, tptprptprp kj
k j
jkij
j
jii . (21)
RESULTS
Table 4 shows the correlations between each pair of the variables, which are cal-
culated by the equation (9). The net income has a positive correlation with the
share price, and so does the environmental investment; however, the social in-
vestment holds a negative correlation with the share price. Fig. 1 also confirms
these correlations; however, it is recognized in the figure, that the amount of envi-
ronmental investment briefly divide the plots of the share price into two groups;
and so does the amount of social investment. Upon this observation, the other cor-
relation matrices are made for different groups, i.e. the higher environmental in-
vestment, the lower environmental investment, the higher social investment, and
the lower social investment. The obtained correlations for these 4 groups are
shown in table 5 to table 8.
T a b l e 4 . Correlation matrix
Variable Income Social
Envi-
ronment
Women NOX SO2
Meth-
ane
CO2 Oil Water
Income 1
Social 0.1265 1
Environment 0.2928 –0.0830 1
Women –0.2104 0.2655 –0.0288 1
NOX 0.4518 0.0769 0.3032 –0.4766 1
SO2 0.6943 –0.0246 0.2415 –0.4392 0.6243 1
Methane 0.3438 0.7020 0.1382 0.3575 0.2460 0.2179 1
CO2 0.4762 0.3077 0.1742 0.1537 0.3471 0.3868 0.7643 1
Oil 0.2696 –0.0169 0.0129 –0.1686 0.0834 0.3233 –0.0887 –0.0220 1
Water 0.2739 0.1104 0.1997 –0.3071 0.0851 0.2617 0.0874 0.0048 0.1443 1
Shareprice 0.3871 –0.0408 0.1894 –0.2342 0.0024 0.4117 –0.1923 –0.1390 0.1107 0.1394
Note: Number of observation is 105. INCOME: net income, SOCIAL: social investment, ENVIRONMENT:
environmental investment, WOMEN: percentage of female management, NOX: NOX emission, SO2: SO2 emis-
sion, METHANE: Methane emission, CO2: CO2 emission, OIL: oil sipll, WATER: water consumption
T a b l e 5 . Correlations for higher social investment (>300 million US dollars)
Variable Income Shareprice Social Women
Income 1
Shareprice 0.2842 1
Social 0.1303 –0.7155 1
Women –0.3493 –0.5999 0.57312 1
Table 5 and table 6 show that the negative correlation between social in-
vestment and the share price is mainly observed in the group of higher social in-
Y. Matsuki, P. Bidyuk, V.J. Danylov, K.I. Yevtushenko
ISSN 1681–6048 System Research & Information Technologies, 2015, № 3 90
vestment, while the group of lower social investment does not indicate negative
correlation with the share price. This observation implies that the social in-
vestment may not prevent raising the share price up to some degree.
T a b l e 6 . Correlations for lower social investment (<300 million US dollars)
Variable Income Shareprice Social Women
Income 1
Shareprice 0.4051 1
Social 0.5331 0.6323 1
Women –0.1732 –0.0963 –0.2902 1
Table 7 and table 8 show that the negative correlation between environ-
mental investment and the share price is mainly observed in the group of higher
environmental investment, while the group of lower environmental investment
does not indicate negative correlation with the share price. This observation im-
plies that the environmental investment may not prevent raising the share price up
to some degree. Table 7 and table 8 also show that the higher environmental in-
vestment holds negative correlations with the volumes of emissions of NOX, SO2,
methane, and CO2, and the volume of spilled oil, while the lower environmental
investment does not. This observation implies that the higher environmental in-
vestment may have induced the effect of reducing the pollutions.
T a b l e 7 . Correlations for higher environmental investment (> 2000 million
US dollars)
Variable Income Environment CO2 Methane NOX SO2 Oil Water
Income 1
Environment –0.5483 1
CO2 0.6395 –0.2921 1
Methane 0.6123 –0.2515 0.9598 1
NOX –0.4987 –0.0362 –0.5262 –0.6514 1
SO2 0.4938 –0.3964 0.8746 0.7875 –0.1629 1
Oil –0.0157 –0.0209 –0.2609 –0.1641 0.1377 –0.3658 1
Water 0.4893 –0.1665 0.3474 0.4028 –0.3562 0.0678 0.6769 1
Shareprice 0.6660 –0.2883 0.3904 0.4309 –0.3502 0.1471 0.2254 0.6628
Upon the findings above, a model for multivariable regression analysis, as
shown in the equation (4), is constructed with the following assumption: the share
price is influenced by the net income (company’s profit as the result of the oil
sales), together with the environmental investment and the social investment.
Fig. 1. Relations between share price, environmental investment, and social investment
S
ha
re
_p
ri
ce
_$
Environmental_investent_$_million Social_investent_$_million
Expected effect of environmental investment on market share of oil company
Системні дослідження та інформаційні технології, 2015, № 3 91
T a b l e 8 . Correlations for lower environmental investment (<2000 million
US dollars)
Variable Income Environment CO2 Methane NOX SO2 OIL Water
Income 1
Environment 0.5496 1
CO2 0.1768 –0.1484 1
Methane 0.0298 –0.2184 0.6403 1
NOX 0.4845 0.4462 0.3551 0.2246 1
SO2 0.7005 0.5799 0.0950 –0.0739 0.6647 1
Oil 0.4320 0.2123 0.0274 –0.0727 0.1025 0.4369 1
Water 0.1346 0.0365 –0.1984 –0.0527 0.0021 0.1965 0.1579 1
Shareprice 0.3933 0.5135 –0.3055 –0.3357 –0.0355 0.4291 0.1167 0.0955
Table 9 shows the results of multivariable regression analysis, which are cal-
culated by the equations from (1) to (8). This result indicates which of the social
investment, the environmental investment or the net income, is more influential to
the share price. In regard to the value of R2, which is calculated by the equation
(11), the model fittings are good in the groups of the higher environmental in-
vestment and the higher social investment, whose value of 2R is higher than 0.60
in both groups. In the group of the higher environmental investment, the coeffi-
cient values indicate that the environmental investment and the net income are
less influential than the social investment; while, in the group of lower environ-
mental investment, the environmental investment is 3 times more influential than
each of the social investment and the net income.
T a b l e 9 . Results of the regression analysis
Case Coefficients in the formula R2 Note
1
Share price = 26.71 + 0.000 Social investment
+ 0.0015 Environmental investment + 0.0017 Net income
0.1628 All data
2
Share price = 32.07 + 0.1448 Social investment
– 0.0003 Environmental investment + 0.0004 Net income
0.6093 For higher environ-
mental investment
3
Share price = 9.883 – 0.0124 Social investment
+ 0.0357 Environmental investment + 0.0011 Net income
0.2838 For lower environ-
mental investment
4
Share price = 0.4783 – 0.0029 Social investment
+ 0.1054 Environmental investment – 0.0023 Net income
0.9172 For higher social
investment
5
Share price = 9.329 +0.3038 Social investment
– 0.0012 Environmental investment + 0.0005 Net income
0.4069 For lower social
investment
In the group of the higher social investment, the environmental investment is
3 times more influential than each of the social investment and the net income;
while, in the group of lower social investment, the social investment is much
more influential than each of the environmental investment and the net income.
The above observation implies that the environmental investment may be
effective for gaining larger market share when the level of the investment doesn’t
exceed a certain degree; and, so may be the social investment.
Then, for investigating the strategy of environmental investment,
3 companies are selected, which are the ExxonMobil and the BP of the group of
higher envionmental investment and the Lukoil in the group of lower
environmental investment. Fig. 2 shows the changes of annual net incomes,
environmental investments and share prices of these companies from 2003 to
Y. Matsuki, P. Bidyuk, V.J. Danylov, K.I. Yevtushenko
ISSN 1681–6048 System Research & Information Technologies, 2015, № 3 92
2012. In this figure, both the share price and environmental investment look as if
they go up and down together. Here, it is noted that the BP made a large-scale
accident at the oil rig in the Gulf of Mexico in 2010, and the net income became
a negative value,and the environmental investment unusually went up higher.
Results of time series analysis
Upon the observations of Fig. 2, it is also recgnized that the continuities of the
movements of these share prices need to be investigated. Then, the values of
monthly shareprices of the ExxonMobil and the Lukoil between January 2003 and
December 2011 are investigaed with the tequnique of time series forecasting.
(Here, the monthly data has been obtained from the open information source of
the historical shpare prices [3], but this database doesn’t contain the information
of environmental investment; therefore, only share prices are analyzed.) The
ExxonMoble is an example of the company that is increasing environmental
investment, and the Lukoil for the example of reducing environmental
investment. Table 10–12 show the matrices of autocorrelations of monthly share
price for each of these two companies, which are calculated by the equation (13).
In both cases of the ExxonMobil and the Lukoil, the autocorrelation doesn’t show
strong periodical trends; but, rather the share price changes only gradually. This
result implies that the relation with the environmental investment might not be
found in time seriese even if monthly data of the environmental investment were
obtained.
Fig. 2. Oil companies’ share price, environmental investment and net income
ExxonMobil
Lukoil
BP
Expected effect of environmental investment on market share of oil company
Системні дослідження та інформаційні технології, 2015, № 3 93
T a b l e 1 0 . Autocorrelations of ExxonMobil’s monthly changes of share price
Shift t t – 1 t – 2 t – 3 t – 4 t – 5 t – 6 t – 7
t 1
t – 1 0.9626 1
t – 2 0.9290 0.9641 1
t – 3 0.8949 0.9326 0.9658 1
t – 4 0.8740 0.9023 0.9369 0.9680 1
t – 5 0.8474 0.8808 0.9067 0.9396 0.9693 1
t – 6 0.8205 0.8529 0.8854 0.9105 0.9434 0.9712 1
t – 7 0.7921 0.8259 0.8581 0.8898 0.9158 0.9467 0.9722 1
Note: t–1 means the 1st autocorrelation; t-2 is the 2nd autocorrelation; and so forth.
Table 11. Autocorrelations of Lukoil’s monthly changes of share price
Shift t t–1 t–2 t–3 t – 4 t – 5 t – 6 t – 7
t 1
t – 1 0.8836 1
t – 2 0.7609 0.8826 1
t – 3 0.6355 0.7596 0.8818 1
t – 4 0.5387 0.6327 0.7575 0.8813 1
t – 5 0.4634 0.5358 0.6280 0.7546 0.8802 1
t – 6 0.3841 0.4625 0.5334 0.6268 0.7554 0.8807 1
t – 7 0.3106 0.3820 0.4585 0.5310 0.6259 0.7562 0.8810 1
T a b l e 1 2 . Gains and loss of the companies at the market )( , jir
Company A B C
A CeU 2/ , CeU 2/ 0, U
2/))2/(0( CeU ,
2/))2/(( CeUU
B U, 0 ,2/)( CpU 2/)( CpU
,2/)2/)(( UCpU
2/)02/)(( CpU
C
2/))2/(( CeUU ,
2/))2/(0( CeU
,2/)02/)(( CpU
2/)2/)(( UCpU
,2/,2 UU
Note: In each cell, the left of the comma is for the company’s type in the row, and the right is for the
column.
Fig. 3 shows the actual plots of the monthly share prices of these
2 companies over 108 months together with calculated curves of the share prices.
The calculated curves are upon the equation (14), which is for the first order
forecasting; because, the first order forecasting is enough and the first
autocorrelation holds the largest value in the autocorrelation matrices, and also
neither does it indicate any periodical trends. The calculated curves imply that the
company of increasing environmental investment, the ExxonMobil, holds the
upward sloping; while the growth of the share price of the Lukoil doesn’t
increase.
Y. Matsuki, P. Bidyuk, V.J. Danylov, K.I. Yevtushenko
ISSN 1681–6048 System Research & Information Technologies, 2015, № 3 94
Results of computer simulation by system dynamics
Upon the results of the investigations reported above, it is found that there is
a possibility that a certain degree of environmental investment may increase the
market share of a company; however, the time series investigation doesn’t iden-
tify the chronological changes that are supposed to be made by the investment.
Therefore, instead of the time series analysis, chronological changes are simulated
by logic and procedure of system dynamics [2], which is shown in the equations
from (15) to (21).
For the computer simulation, the following logic is made: there are 3 types
of the companies, A, B, and C, with net income )(U , cost for environmental in-
vestment )(Ce and penalty or cost for recovering accident )(Cp for each com-
pany’s strategy.
Company A always minds environment, and takes the best possible ac-
tions to reduce the emissions, and waits until its competitor fails in the market.
Company B never minds environment, and always tries to take over the
market from the competitors until it gets accident or penalty.
Company C always minds environment, and takes the best possible ef-
forts to reduce the emissions, but emits the pollutions only when it meets a seri-
ous/strong competitor at the market.
For example, when C meets A in the market, there are 2 equal possibilities.
If C holds the clients of the market, it keeps the net income )(U and A
takes nothing (0).
If A hold the clients of the market, both have to wait until one of them
gives up by only paying the cost of environmental investment )(Ce , and then one
of them gets the income )(U with equal possibility. So the expected outcome of
this case is CeU 2/ for both of them.
Thus, the overall outcome is 2/))2/(( CeUU for ,C and
2/))2/(0( CeU for .A
Thus the gains/loss of the companies )( , jir in their meetings are as shown in
Table 12.
Fig. 3. The first order forecasting of share prices for ExxonMobil and Lukoil (US dollars)
ExxonMobil Lukoil
Expected effect of environmental investment on market share of oil company
Системні дослідження та інформаційні технології, 2015, № 3 95
Upon the above logic, the chronological changes of the proportion ip( , i.e.
,Ap ,Bp and )Cp of 3 types of the companies are calculated by the equation
(21), which hold 3 different types of strategies respectively. The initial conditions
(when 0t ) for ,ip ,U Ce, and Cp are shown in Fig. 4 together with the results
of the calculations. On the simulation, 3 cases are made in accordance to the
difference of the initial conditions. The case 1 assumes 0.05 for the proportion of
the company type A, 0.80 for the type B, and 0.15 for the type C when .0t
These proportions for the case 1 are set, after observing Fig. 5, in which each
point on the horizontal axis represents one company of one year and the vertical
axis shows the ratio of environmental investment and net income of each
company of each year. In Fig. 5, it is observed that 25 percent of the companies
invest more than 10 percent of their incomes for the environmental issues, and
about 5 percent invest more than 20 percent of the net income. For the simulation,
the top 5 percentile are assumed to be the type A, and the second 20 percent are
the type C, and the rest are the type B. Meanwhile, in the year of the oil spill
accident of the BP in 2010, the net income was reduced almost 120 percent in
comparison with the previous years’, and the expenditures for the environmental
issues increased 7 times as much as in the previous years. From this observation,
the simulation assumes 1.20 as the cost of the accident )(Cp , while the net
income )(U is 1.0. About the cost of environmental investment )(Ce , 3 cases are
simulated, i.e. 0.1, 0.2 and 0.3, which are selected from Fig. 5. The number of
steps (t) calculated in this simulation is 302.
The results of the simulation show that the type A and the type B strategies
will lose the market share gradually, while the type C strategy increases the mar-
Case Strategy pi U Ce Cp
A 0.05
B 0.75 1
C 0.20
1.00 0.10 1.20
A 0.05
B 0.75 2
C 0.20
1.00 0.20 1.20
A 0.05
B 0.75 3
C 0.20
1.00 0.30 1.20
Сase 1
Сase 2 Сase 3p p
p
t
t t
Fig. 4. Initial conditions and the results of computer simulation
Y. Matsuki, P. Bidyuk, V.J. Danylov, K.I. Yevtushenko
ISSN 1681–6048 System Research & Information Technologies, 2015, № 3 96
ket share. In all 3 cases, the share of the type C exceeds the type B’s; but, the tim-
ing of the type C exceeding the type B will be delayed when the cost of environ-
mental investment becomes larger. This observation shows a similarity with the
observation at the econometrics analysis, in which the environmental investment
and the higher share price have correlations as long as the investment doesn’t ex-
ceed a certain level.
CONCLUSIONS AND RECOMMENDATIONS
At first, the correlations and multivariable regression analysis were made to in-
vestigate the strength of the relation between the environmental investment and
the share price; then the time-series analysis on the share prices is made on se-
lected companies. Upon the results of these investigations, it is found that there is
a possibility that a certain degree of environmental investment may increase the
market share of a company; and then, computer simulation was carried out with
the method of system dynamics to test the logic of the investment strategy. The
results indicate that there is a possibility for strategic environmental investment,
while still increasing the market share.
The results of the analysis by the econometrics and the computer simulation
both show that the strategy of environmental investment may increase the market
share as long as the investment is made up to a certain degree, with the presence
of rival companies in the same market. However, the simulation is not for the real
time, but it is purely for the investigation of the logic and the strategy; therefore,
definitive results of the decision making is not obtained yet. Further researches
are needed on the topic.
REFERENCES
1. Goldberger A.S. A Course in Econometrics. — Cambridge: Harvard University
Press, 1991. — 405 p. — http://facweb.knowlton.ohio-state.edu/pviton/courses/
crp8703/ goldberger_Chs_4_5_6.pdf.
2. Gilbert N., Troitszsch K.G. Simulation for the Social Scientists. — London: Open
University Press, 1999. — 288 p.
3. finance.yahoo.com
Received 05.11.2014
From the Editorial Board: the article corresponds completely to submitted manuscript.
Fig 5. Ranking of the companies in environmental investment vs. net income
|
| id | journaliasakpiua-article-53414 |
| institution | System research and information technologies |
| keywords_txt_mv | keywords |
| language | English |
| last_indexed | 2025-07-17T10:19:34Z |
| publishDate | 2015 |
| publisher | The National Technical University of Ukraine "Igor Sikorsky Kyiv Polytechnic Institute" |
| record_format | ojs |
| resource_txt_mv | journaliasakpiua/21/c541d6a06918d05ee17c190227ff2f21.pdf |
| spelling | journaliasakpiua-article-534142016-07-21T13:43:12Z Expected effect of environmental investment on market share of oil company Ожидаемые последствия инвестиций в охрану окружающей среды для доли рынка нефтяной компании Очікувані наслідки інвестицій в охорону навколишнього середовища для частки ринку нафтової компанії Matsuki, Y. Bidyuk, P. I. Danylov, V. J. Yevtushenko, K. I. This research is aimed at examining a possibility of using environmental investment as an oil company’s strategy for increasing its market share. The numeric data of environmental investment and share price in oil market are analyzed with the method of econometrics [1], and then the com-puter simulation is carried out with the method of system dynamics [2]. Yearly data are collected between 2003 and 2011 from open information sources of 12 major oil companies in 8 countries, on their net incomes, share prices, environmental investments, social investments, the emitted amounts of 4 types of air pollutions, and the volumes of spilled oil into the oceans. Upon the results of the investigations, it is found that there is a possibility that a certain degree of environmental investment may increase the market share of a company; and, there is a possibility for strategic environmental investment, while still increasing the market share. Изучена возможность использования инвестиций в охрану окружающей среды в качестве стратегии нефтяной компании для увеличения ее доли рынка. Числовые данные инвестиций в охрану окружающей среды и курсовая стоимость акций на рынке нефти проанализированы с помощью эконометрического метода, после чего проведено компьютерное моделирование с использованием метода системной динамики. Годовые данные за 2003–2011 годы получены из открытых информационных источников 12 основных нефтяных компаний из 8 стран, и касаются чистой прибыли, курсовой стоимости акций, инвестиций в охрану окружающей среды, социальных инвестиций, количества атмосферных выбросов 4 видов, а также объема нефти, вылитой в мировой океан. На основании результатов исследования установлено, что определенная мера инвестиций в охрану окружающей среды может увеличит долю рынка компании, а также, что существует возможность осуществлять стратегические инвестиции в охрану окружающей среды, увеличивая при этом долю рынка. Вивчено можливість використання інвестицій в охорону навколишнього середовища в якості стратегії нафтової компанії з метою збільшення її частки ринку. Числові дані інвестицій в охорону навколишнього середовища та курсова вартість акцій на ринку нафти проаналізовані за допомогою економетричного методу, після чого проведено комп’ютерне моделювання з використанням методу системної динаміки. Річні дані за 2003–2011 роки отримані з відкритих інформаційних джерел 12 основних нафтових компаній з 8 країн, і стосуються їхнього чистого прибутку, курсової вартості акцій, інвестицій в охорону навколиш-нього середовища, соціальних інвестицій, кількості атмосферних викидів 4 видів, а також об’єму вилитої у світовий океан нафти. На підставі результатів дослідження було встановле-но, що певна міра інвестицій в охорону довкілля може збільшити частку ринку компанії, а також, що існує можливість здійснювати стратегічні інвестиції в охорону навколишнього середовища і збільшувати при цьому частку ринку. The National Technical University of Ukraine "Igor Sikorsky Kyiv Polytechnic Institute" 2015-09-30 Article Article application/pdf https://journal.iasa.kpi.ua/article/view/53414 System research and information technologies; No. 3 (2015); 84-96 Системные исследования и информационные технологии; № 3 (2015); 84-96 Системні дослідження та інформаційні технології; № 3 (2015); 84-96 2308-8893 1681-6048 en https://journal.iasa.kpi.ua/article/view/53414/49446 Copyright (c) 2021 System research and information technologies |
| spellingShingle | Matsuki, Y. Bidyuk, P. I. Danylov, V. J. Yevtushenko, K. I. Очікувані наслідки інвестицій в охорону навколишнього середовища для частки ринку нафтової компанії |
| title | Очікувані наслідки інвестицій в охорону навколишнього середовища для частки ринку нафтової компанії |
| title_alt | Expected effect of environmental investment on market share of oil company Ожидаемые последствия инвестиций в охрану окружающей среды для доли рынка нефтяной компании |
| title_full | Очікувані наслідки інвестицій в охорону навколишнього середовища для частки ринку нафтової компанії |
| title_fullStr | Очікувані наслідки інвестицій в охорону навколишнього середовища для частки ринку нафтової компанії |
| title_full_unstemmed | Очікувані наслідки інвестицій в охорону навколишнього середовища для частки ринку нафтової компанії |
| title_short | Очікувані наслідки інвестицій в охорону навколишнього середовища для частки ринку нафтової компанії |
| title_sort | очікувані наслідки інвестицій в охорону навколишнього середовища для частки ринку нафтової компанії |
| url | https://journal.iasa.kpi.ua/article/view/53414 |
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