Advanced Search
MyIDEAS: Login

Core business concentration vs. corporate diversification in the US electric utility industry: Synergy and deregulation effects

Contents:

Author Info

  • Sueyoshi, Toshiyuki
  • Goto, Mika
  • Shang, Jennifer
Registered author(s):

    Abstract

    Many economists such as Wilson (2002) [Wilson, R., 2002. Architecture of power market, Econometrica, 70, 1299-1340] have considered that there are similarities between electricity and gas services in the US electric utility industry. Hence, they expect a synergy effect between them. However, the two businesses do not have technology similarities at the level that the gas service produces a synergy effect with electricity. To examine whether there is a synergy effect of corporate diversification in the industry, we compare electricity-specialized firms with diversified utility firms in terms of their financial performance and corporate value. The comparison indicates that core business concentration is more effective for electric utility firms than corporate diversification under the current US deregulation policy.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.sciencedirect.com/science/article/B6V2W-4WM053X-4/2/dc2c285ed68a44f7f24c50fbc20e4baf
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by Elsevier in its journal Energy Policy.

    Volume (Year): 37 (2009)
    Issue (Month): 11 (November)
    Pages: 4583-4594

    as in new window
    Handle: RePEc:eee:enepol:v:37:y:2009:i:11:p:4583-4594

    Contact details of provider:
    Web page: http://www.elsevier.com/locate/enpol

    Related research

    Keywords: Electricity Synergy Deregulation;

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Paul L. Joskow, 1997. "Restructuring, Competition and Regulatory Reform in the U.S. Electricity Sector," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 119-138, Summer.
    2. Sueyoshi, Toshiyuki & Goto, Mika, 2009. "Methodological comparison between DEA (data envelopment analysis) and DEA-DA (discriminant analysis) from the perspective of bankruptcy assessment," European Journal of Operational Research, Elsevier, vol. 199(2), pages 561-575, December.
    3. Sueyoshi, Toshiyuki & Sekitani, Kazuyuki, 2009. "An occurrence of multiple projections in DEA-based measurement of technical efficiency: Theoretical comparison among DEA models from desirable properties," European Journal of Operational Research, Elsevier, vol. 196(2), pages 764-794, July.
    4. Francisco J. Ramos-Real & Beatriz Tovar & Mariana Iootty & Edmar Fagundes de Almeida & Helder Jr. Queiroz Pinto, 2008. "The evolution and main determinants of productivity in Brazilian electricity distribution 1998-2005: an empirical analysis," Working Papers 2008-41, FEDEA.
    5. Larry H.P. Lang & Rene M. Stulz, 1993. "Tobin's Q, Corporate Diversification and Firm Performance," NBER Working Papers 4376, National Bureau of Economic Research, Inc.
    6. Robert Wilson, 2002. "Architecture of Power Markets," Econometrica, Econometric Society, vol. 70(4), pages 1299-1340, July.
    7. Dubois, Ute, 2009. "Adaptability of competitive electricity reforms a modular analysis," Energy Policy, Elsevier, vol. 37(4), pages 1213-1221, April.
    8. Green, Richard & Newbery, David M G, 1991. "Competition in the British Electricity Spot Market," CEPR Discussion Papers 557, C.E.P.R. Discussion Papers.
    9. Tomas Jandik & Anil K. Makhija, 2005. "Can Diversification Create Value? Evidence from the Electric Utility Industry," Financial Management, Financial Management Association, vol. 34(1), Spring.
    10. Tobin, James, 1969. "A General Equilibrium Approach to Monetary Theory," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 1(1), pages 15-29, February.
    11. Belén Villalonga, 2004. "Diversification Discount or Premium? New Evidence from the Business Information Tracking Series," Journal of Finance, American Finance Association, vol. 59(2), pages 479-506, 04.
    12. Antoinette Schoar, 2002. "Effects of Corporate Diversification on Productivity," Journal of Finance, American Finance Association, vol. 57(6), pages 2379-2403, December.
    13. Campa, Jose M. & Kedia, Simi, 2000. "Explaining the diversification discount," IESE Research Papers D/424, IESE Business School.
    14. Catherine D. Wolfram, 1999. "Measuring Duopoly Power in the British Electricity Spot Market," American Economic Review, American Economic Association, vol. 89(4), pages 805-826, September.
    15. Barros, Carlos Pestana & Peypoch, Nicolas, 2008. "Technical efficiency of thermoelectric power plants," Energy Economics, Elsevier, vol. 30(6), pages 3118-3127, November.
    16. Edward I. Altman, 1968. "Financial Ratios, Discriminant Analysis And The Prediction Of Corporate Bankruptcy," Journal of Finance, American Finance Association, vol. 23(4), pages 589-609, 09.
    17. Servaes, Henri, 1996. " The Value of Diversification during the Conglomerate Merger Wave," Journal of Finance, American Finance Association, vol. 51(4), pages 1201-25, September.
    18. Belén Villalonga, 2004. "Does Diversification Cause the "Diversification Discount"?," Financial Management, Financial Management Association, vol. 33(2), Summer.
    19. Sueyoshi, Toshiyuki, 2006. "DEA-Discriminant Analysis: Methodological comparison among eight discriminant analysis approaches," European Journal of Operational Research, Elsevier, vol. 169(1), pages 247-272, February.
    20. Eisenbeis, Robert A, 1977. "Pitfalls in the Application of Discriminant Analysis in Business, Finance, and Economics," Journal of Finance, American Finance Association, vol. 32(3), pages 875-900, June.
    21. John R. Graham & Michael L. Lemmon & Jack G. Wolf, 2002. "Does Corporate Diversification Destroy Value?," Journal of Finance, American Finance Association, vol. 57(2), pages 695-720, 04.
    22. Dyner, Isaac & Larsen, Erik & Franco, Carlos Jaime, 2009. "Games for electricity traders: Understanding risk in a deregulated industry," Energy Policy, Elsevier, vol. 37(2), pages 465-471, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Sueyoshi, Toshiyuki & Goto, Mika & Ueno, Takahiro, 2010. "Performance analysis of US coal-fired power plants by measuring three DEA efficiencies," Energy Policy, Elsevier, vol. 38(4), pages 1675-1688, April.
    2. Sueyoshi, Toshiyuki & Goto, Mika, 2011. "Operational synergy in the US electric utility industry under an influence of deregulation policy: A linkage to financial performance and corporate value," Energy Policy, Elsevier, vol. 39(2), pages 699-713, February.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:37:y:2009:i:11:p:4583-4594

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wendy Shamier).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.