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How Does the Power Generation Mix Affect the Market Value of US Energy Companies?

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  • Silvia Bressan

    (Faculty of Economics and Management, Free University of Bozen, 39100 Bolzano, Italy)

Abstract

To remain competitive in the decarbonization process of the economy worldwide, energy companies must preserve their market value to attract new investors and remain resilient throughout the transition to net zero. This article examines the market value of US energy companies during the period 2012–2024 in relation to their power generation mix. Panel regression analyses reveal that Tobin’s q and price-to-book ratios increase significantly for solar and wind power, while they experience moderate increases for natural gas power. In contrast, Tobin’s q and price-to-book ratios decline for nuclear and coal power. Furthermore, accounting-based profitability, measured by the return on assets (ROA), does not show significant variation with any type of power generation. The findings suggest that market investors prefer solar, wind, and natural gas power generation, thereby attributing greater value (that is, demanding lower risk compensation) to green companies compared to traditional ones. These insights provide guidance to executives, investors, and policy makers on how the power generation mix can influence strategic decisions in the energy sector.

Suggested Citation

  • Silvia Bressan, 2025. "How Does the Power Generation Mix Affect the Market Value of US Energy Companies?," JRFM, MDPI, vol. 18(8), pages 1-19, August.
    • Handle: RePEc:gam:jjrfmx:v:18:y:2025:i:8:p:437-:d:1718694
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    4. Rahul Verma & Arpita A. Shroff, 2025. "ESG Risks and Market Valuations: Evidence from the Energy Sector," IJFS, MDPI, vol. 13(2), pages 1-26, June.
    5. Jared Jennings & Jung Min Kim & Joshua Lee & Daniel Taylor, 2024. "Measurement error, fixed effects, and false positives in accounting research," Review of Accounting Studies, Springer, vol. 29(2), pages 959-995, June.
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