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The Formation of Public Utility Holding Companies and Their Subsequent Diversification Activity

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  • Robison, H David
  • Davidson, Wallace N, III
  • Glascock, John L

Abstract

This paper examines the stock market reaction to announcements that utilities are converting to utility holding companies. There are negative abnormal returns associated with these announcements. Holding companies permit these utilities to diversify beyond the utility industry, and the announcements of their formation may signal the market of their intentions to diversify. The negative abnormal returns associated with these announcements and the negative abnormal returns associated with subsequent announcements of acquisitions are consistent with other research showing that diversifying bidders lose more (or gain less) than non-diversifying bidders. Copyright 1995 by Kluwer Academic Publishers

Suggested Citation

  • Robison, H David & Davidson, Wallace N, III & Glascock, John L, 1995. "The Formation of Public Utility Holding Companies and Their Subsequent Diversification Activity," Journal of Regulatory Economics, Springer, vol. 7(2), pages 199-214, March.
  • Handle: RePEc:kap:regeco:v:7:y:1995:i:2:p:199-214
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    References listed on IDEAS

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    1. Juan J. Ganuza, 1998. "Competition and cost overruns. Optimal misspecification of procurement contracts," Economics Working Papers 471, Department of Economics and Business, Universitat Pompeu Fabra, revised Mar 2002.
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    Cited by:

    1. Bel, Germà & Trillas, Francesc, 2005. "Privatization, corporate control and regulatory reform: the case of Telefonica," Telecommunications Policy, Elsevier, pages 25-51.

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