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Excess Returns in Electric Utility Mergers during Transition to Competition

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  • Berry, S Keith

Abstract

A standard event methodology is used to evaluate recent electric utility mergers as the industry moves to competitive generation markets. Statistically significant effects were focused on the day before the announcement and the day of the announcement, and were fairly small, although statistically significant. Shareholders perceive very little merger benefits occurring in a highly competitive generation sector. Markets reacted more positively to the gas/electric mergers, indicating stockholder appreciation for opportunities for scope economies. U.S. acquirers suffered no significant wealth losses in mergers with British and Australian utilities. Copyright 2000 by Kluwer Academic Publishers

Suggested Citation

  • Berry, S Keith, 2000. "Excess Returns in Electric Utility Mergers during Transition to Competition," Journal of Regulatory Economics, Springer, vol. 18(2), pages 175-188, September.
    • Handle: RePEc:kap:regeco:v:18:y:2000:i:2:p:175-88
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    Citations

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    Cited by:

    1. Scarpa, Carlo & Calzolari, Giacomo, 2007. "Regulating a Multi-Utility Firm," CEPR Discussion Papers 6238, C.E.P.R. Discussion Papers.
    2. Kwoka, John & Pollitt, Michael, 2010. "Do mergers improve efficiency? Evidence from restructuring the US electric power sector," International Journal of Industrial Organization, Elsevier, vol. 28(6), pages 645-656, November.
    3. Calzolari, Giacomo & Scarpa, Carlo, 2009. "On Regulation and Competition: Pros and Cons of a Diversified Monopolist," Institutions and Markets Papers 52543, Fondazione Eni Enrico Mattei (FEEM).
    4. John Kwoka & Michael Pollitt, 2007. "Industry Restructuring, Mergers and Efficiency: Evidence from Electric Power," Working Papers EPRG 0708, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    5. Nogata, Daisuke & Uchida, Konari & Goto, Naohisa, 2011. "Is corporate governance important for regulated firms' shareholders?: Evidence from Japanese mergers and acquisitions," Journal of Economics and Business, Elsevier, vol. 63(1), pages 46-68, January.
    6. Ralph Sonenshine, 2016. "Effect of Utility Deregulation and Mergers on Consumer Welfare," Working Papers 2016-08, American University, Department of Economics.
    7. Teti, Emanuele & Tului, Stefano, 2020. "Do mergers and acquisitions create shareholder value in the infrastructure and utility sectors? Analysis of market perceptions," Utilities Policy, Elsevier, vol. 64(C).
    8. Joseph P. McGarrity & Armand Picou, 2001. "Do Several Winning Coalitions Exist in a State for Senators of the Same Party? Evidence from an Event Study," Southern Economic Journal, John Wiley & Sons, vol. 68(2), pages 281-309, October.
    9. Monastyrenko, Evgenii, 2017. "Eco-efficiency outcomes of mergers and acquisitions in the European electricity industry," Energy Policy, Elsevier, vol. 107(C), pages 258-277.
    10. Meinshausen, Steffen & Schiereck, Dirk, 2011. "Dressed to merge — small fits fine: M&A success in the fashion and accessories industry," International Review of Financial Analysis, Elsevier, vol. 20(5), pages 283-291.
    11. Evgenii Monastyrenko, 2016. "Cross-Border M&As and Eco-Environmental Performance of European Energy Utilities," FIW Working Paper series 169, FIW.
    12. Giacomo Calzolari & Carlo Scarpa, 2016. "Conglomerates And Regulation," Economic Inquiry, Western Economic Association International, vol. 54(3), pages 1648-1669, July.
    13. Nogata, Daisuke & Uchida, Konari & Goto, Naohisa, 2011. "Is corporate governance important for regulated firms’ shareholders?," Journal of Economics and Business, Elsevier, vol. 63(1), pages 46-68.
    14. Ramit Mehta & Dirk Schiereck, 2012. "The Consolidation Of The Global Brewing Industry And Wealth Effects From Mergers And Acquisitions," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 6(3), pages 67-87.

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