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European energy industry shocks, corporate control and firms' value

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  • John J. García
  • Francesc Trillas

Abstract

The deregulation process in the EU electricity sector triggered strategic decisions that led to industry restructuring. This paper presents preliminary evidence of the impact of this process on investors, using event studies and estimation techniques such as least squares and GARCH. Our findings suggest three stylized facts: 1) regulatory reform in Europe was certainly accompanied by a takeover wave, as predicted by Mitchell and Mulherin (1996); 2) mergers and acquisitions had a positive impact on the stock price of target firms, and a much lower and sometimes even a negative impact for the bidding firms; 3) the effect of takeover announcements on the returns of competitors of the merging firms depends on the degree of market power. In countries with high market power (like Spain) competitors significantly increase share returns upon takeover announcements, whereas in countries with lower market power (like England and Wales) returns do not change significantly.

Suggested Citation

  • John J. García & Francesc Trillas, 2013. "European energy industry shocks, corporate control and firms' value," Documentos de Trabajo de Valor Público 10928, Universidad EAFIT.
    • Handle: RePEc:col:000122:010928
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    References listed on IDEAS

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    2. John J. García & Francesc Trillas, 2012. "Regulatory Reform and Corporate Control in European Energy Industries," Documentos de Trabajo de Valor Público 10664, Universidad EAFIT.
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    More about this item

    Keywords

    Deregulation; mergers and acquisitions; event study; energy;
    All these keywords.

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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