Operational synergy in the US electric utility industry under an influence of deregulation policy: A linkage to financial performance and corporate value
Sueyoshi et al. (2009) have examined a synergy effect between electricity and gas services in the US electric utility industry. They have compared electricity-specialized firms with diversified utility firms in their financial performance and corporate value. A problem of their study is that it has not empirically measured the operational performance of the electric utility firms. As an extension of the preceding study, this research investigates the operational performance of 104 US electric utility firms (1990-2004) by fully utilizing DEA (Data Envelopment Analysis). This study finds the three new policy implications. First, the synergy effect has not existed in the operational performance of diversified utility firms before and after the deregulation on the US electricity markets. Thus, core business concentration is more effective for electric utility firms than corporate diversification to enhance their operational performance under the current US deregulation policy. Second, the operational performance has had an increasing trend until 1996 and a decreasing trend after 1996. Thus, the US deregulation policy has been influential on their operational performance. Third, the enhancement in operational performance of electric utility firms has improved their financial performance. The improvement in financial performance has increased their corporate value. Thus, this study finds the business causality among operational performance, financial performance and corporate value in the US electric utility industry.
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.
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.
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.:
- Pombo, Carlos & Taborda, Rodrigo, 2006.
"Performance and efficiency in Colombia's power distribution system: Effects of the 1994 reform,"
Elsevier, vol. 28(3), pages 339-369, May.
- Carlos Pombo & Rodrigo Taborda, 2004. "Perfomance and Efficiency in Colombia's Power Distribution Sistem: Effects of the 1994 Reform," BORRADORES DE INVESTIGACIÓN 006942, UNIVERSIDAD DEL ROSARIO.
- Agrell, Per J. & Bogetoft, Peter, 2005.
"Economic and environmental efficiency of district heating plants,"
Elsevier, vol. 33(10), pages 1351-1362, July.
- AGRELL, Per J. & BOGETOF, Peter, . "Economic and environment efficiency of district heating plants," CORE Discussion Papers RP 1838, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- A. Charnes & W. W. Cooper & T. Sueyoshi, 1988. "A Goal Programming/Constrained Regression Review of the Bell System Breakup," Management Science, INFORMS, vol. 34(1), pages 1-26, January.
- Olatubi, Williams O. & Dismukes, David E., 2000. "A data envelopment analysis of the levels and determinants of coal-fired electric power generation performance," Utilities Policy, Elsevier, vol. 9(2), pages 47-59, June.
- Azadeh, A. & Ghaderi, S.F. & Omrani, H. & Eivazy, H., 2009. "An integrated DEA-COLS-SFA algorithm for optimization and policy making of electricity distribution units," Energy Policy, Elsevier, vol. 37(7), pages 2605-2618, July.
- 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.
- Jose Manuel Campa & Simi Kedia, 2002.
"Explaining the Diversification Discount,"
Journal of Finance,
American Finance Association, vol. 57(4), pages 1731-1762, 08.
- José Manuel Campa & Simi Kedia, 1999. "Explaining the Diversification Discount," Working Papers 99-06, New York University, Leonard N. Stern School of Business, Department of Economics.
- Campa, Jose M. & Kedia, Simi, 2000. "Explaining the diversification discount," IESE Research Papers D/424, IESE Business School.
- 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.
- Sueyoshi, Toshiyuki & Goto, Mika, 2001. "Slack-adjusted DEA for time series analysis: Performance measurement of Japanese electric power generation industry in 1984-1993," European Journal of Operational Research, Elsevier, vol. 133(2), pages 232-259, January.
- 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.
- Thakur, Tripta & Deshmukh, S.G. & Kaushik, S.C., 2006. "Efficiency evaluation of the state owned electric utilities in India," Energy Policy, Elsevier, vol. 34(17), pages 2788-2804, November.
- Sueyoshi, Toshiyuki & Goto, Mika, 2009. "Can environmental investment and expenditure enhance financial performance of US electric utility firms under the clean air act amendment of 1990?," Energy Policy, Elsevier, vol. 37(11), pages 4819-4826, November.
- Resende, Marcelo, 2002. "Relative efficiency measurement and prospects for yardstick competition in Brazilian electricity distribution," Energy Policy, Elsevier, vol. 30(8), pages 637-647, June.
- Glover, Fred & Sueyoshi, Toshiyuki, 2009. "Contributions of Professor William W. Cooper in Operations Research and Management Science," European Journal of Operational Research, Elsevier, vol. 197(1), pages 1-16, August.
- 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.
- Lang, Larry H P & Stulz, Rene M, 1994. "Tobin's q, Corporate Diversification, and Firm Performance," Journal of Political Economy, University of Chicago Press, vol. 102(6), pages 1248-80, December.
- Zhou, P. & Ang, B.W., 2008. "Linear programming models for measuring economy-wide energy efficiency performance," Energy Policy, Elsevier, vol. 36(8), pages 2901-2906, August.
- Azadeh, A. & Amalnick, M.S. & Ghaderi, S.F. & Asadzadeh, S.M., 2007. "An integrated DEA PCA numerical taxonomy approach for energy efficiency assessment and consumption optimization in energy intensive manufacturing sectors," Energy Policy, Elsevier, vol. 35(7), pages 3792-3806, July.
- Sueyoshi, Toshiyuki & Anselmo, Peter C, 1986. "The Evans and Heckman Subadditivity Test: Comment," American Economic Review, American Economic Association, vol. 76(4), pages 854-55, September.
- Jamasb, Tooraj & Pollitt, Michael, 2003. "International benchmarking and regulation: an application to European electricity distribution utilities," Energy Policy, Elsevier, vol. 31(15), pages 1609-1622, December.
- Hawdon, David, 2003. "Efficiency, performance and regulation of the international gas industry--a bootstrap DEA approach," Energy Policy, Elsevier, vol. 31(11), pages 1167-1178, September.
- Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
- Emrouznejad, Ali & Parker, Barnett R. & Tavares, Gabriel, 2008. "Evaluation of research in efficiency and productivity: A survey and analysis of the first 30 years of scholarly literature in DEA," Socio-Economic Planning Sciences, Elsevier, vol. 42(3), pages 151-157, September.
- 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.
- Robert Wilson, 2002. "Architecture of Power Markets," Econometrica, Econometric Society, vol. 70(4), pages 1299-1340, July.
- Nag, Barnali, 2006. "Estimation of carbon baselines for power generation in India: the supply side approach," Energy Policy, Elsevier, vol. 34(12), pages 1399-1410, August.
- Park, Soo-Uk & Lesourd, Jean-Baptiste, 2000. "The efficiency of conventional fuel power plants in South Korea: A comparison of parametric and non-parametric approaches," International Journal of Production Economics, Elsevier, vol. 63(1), pages 59-67, January.
- 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.
- Abbott, Malcolm, 2006. "The productivity and efficiency of the Australian electricity supply industry," Energy Economics, Elsevier, vol. 28(4), pages 444-454, July.
- Sarıca, Kemal & Or, Ilhan, 2007. "Efficiency assessment of Turkish power plants using data envelopment analysis," Energy, Elsevier, vol. 32(8), pages 1484-1499.
- 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.
- Berger, Philip G. & Ofek, Eli, 1995. "Diversification's effect on firm value," Journal of Financial Economics, Elsevier, vol. 37(1), pages 39-65, January.
- Lam, Pun-Lee & Shiu, Alice, 2001. "A data envelopment analysis of the efficiency of China's thermal power generation," Utilities Policy, Elsevier, vol. 10(2), pages 75-83, June.
- R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
- Zhou, P. & Ang, B.W. & Poh, K.L., 2008. "A survey of data envelopment analysis in energy and environmental studies," European Journal of Operational Research, Elsevier, vol. 189(1), pages 1-18, August.
- Boyd, Gale A. & Pang, Joseph X., 2000. "Estimating the linkage between energy efficiency and productivity," Energy Policy, Elsevier, vol. 28(5), pages 289-296, May.
- 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.
- Sueyoshi, Toshiyuki & Goto, Mika & Shang, Jennifer, 2009. "Core business concentration vs. corporate diversification in the US electric utility industry: Synergy and deregulation effects," Energy Policy, Elsevier, vol. 37(11), pages 4583-4594, November.
- Sueyoshi, Toshiyuki & Sekitani, Kazuyuki, 2007. "The measurement of returns to scale under a simultaneous occurrence of multiple solutions in a reference set and a supporting hyperplane," European Journal of Operational Research, Elsevier, vol. 181(2), pages 549-570, September.
- Antoinette Schoar, 2002. "Effects of Corporate Diversification on Productivity," Journal of Finance, American Finance Association, vol. 57(6), pages 2379-2403, December.
- Ramanathan, R., 2000. "A holistic approach to compare energy efficiencies of different transport modes," Energy Policy, Elsevier, vol. 28(11), pages 743-747, September.
When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:39:y:2011:i:2:p:699-713. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
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.