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Efficiency and Mergers and Acquisitions of Electric Utility Companies

Author

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  • Mika Goto

    (School of Environment and Society, Tokyo Institute of Technology, 3-3-6 Shibaura, Minato-ku, Tokyo 108-0023, Japan)

  • Tadaaki Tomikawa

    (School of Environment and Society, Tokyo Institute of Technology, 3-3-6 Shibaura, Minato-ku, Tokyo 108-0023, Japan)

  • Toshiyuki Sueyoshi

    (School of Environment and Society, Tokyo Institute of Technology, 3-3-6 Shibaura, Minato-ku, Tokyo 108-0023, Japan
    The Center for Economic Research, Shandong School of Development, Shandong University, Jinan 250100, China)

Abstract

Since the 1990s, market liberalization of the electricity industry has advanced all around the world. To survive in the drastically changing business environment, incumbent electric utility companies have conducted operational reforms, including Mergers and Acquisitions (M&As), to enhance and/or complement existing business capabilities. The purpose of this study was to measure the operational efficiencies of 31 of the world’s largest electric utility companies using data from 2010 to 2020 and examine regional differences in and the impacts of M&As on the efficiencies. For this purpose, we applied a new type of Data Envelopment Analysis (DEA) and Tobit model regression. We provide findings from the empirical analyses and discuss the business implications of M&As for electric utility companies. The operational efficiency measures were different among regions, but did not show statistically significant changes over the study period from 2010 to 2020. Furthermore, the results of regression analyses indicate that the increasing number of M&A buying transactions and M&A total transactions has a negative marginal impact on the operational efficiency or leads to a lower operational efficiency for utility companies. Since electricity utility companies have not received gains in operational efficiency from increasing the number of M&A transactions, they need to be more cautious about whether M&A transactions can provide value to the operation and technology management.

Suggested Citation

  • Mika Goto & Tadaaki Tomikawa & Toshiyuki Sueyoshi, 2024. "Efficiency and Mergers and Acquisitions of Electric Utility Companies," Energies, MDPI, vol. 17(8), pages 1-17, April.
    • Handle: RePEc:gam:jeners:v:17:y:2024:i:8:p:1972-:d:1380148
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    References listed on IDEAS

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    1. Luis Gautier & Mahelet G. Fikru, 2024. "Electric Utility Mergers in the Presence of Distributed Renewable Energy," Natural Resource Management and Policy, in: Handbook of Merger Control and Environmental Policy, chapter 0, pages 63-92, Springer.
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    1. Bożena Kusz & Dariusz Kusz & Oktawia Jurgilewicz & Marcin Jurgilewicz & Bartosz Kozicki & Stanisław Topolewski, 2025. "The Technical Efficiency of Polish Energy Sector Companies of Different Sizes," Energies, MDPI, vol. 18(10), pages 1-27, May.

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