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The market reaction to operational risk events in the energy sector

Author

Listed:
  • Sofia Kalatha

    (Aristotle University of Thessaloniki)

  • Panagiotis Dontis-Charitos

    (ESCP Business School)

  • Kyriaki Kosmidou

    (Aristotle University of Thessaloniki)

  • Kostas Andriosopoulos

    (Audencia Business School)

Abstract

Despite the growing importance of operational risk, little is known about the impact of operational losses on the stock prices of energy firms. We fill this void by examining the market reaction of energy firms to a unique international sample of 452 operational loss events announced between 1996 and 2021, constructed using the SAS OpRisk Global Data database. Our results reveal negative and significant abnormal returns following the announcement of operational losses, while further analysis shows that results vary with event and/or announcing firm characteristics. Our evidence can help inform multiple stakeholders in the energy industry in the pricing, asset allocation, and risk management functions, as well as help regulators design effective mechanisms to mitigate the impact of operational losses on the economy and society.

Suggested Citation

  • Sofia Kalatha & Panagiotis Dontis-Charitos & Kyriaki Kosmidou & Kostas Andriosopoulos, 2025. "The market reaction to operational risk events in the energy sector," Annals of Operations Research, Springer, vol. 347(1), pages 611-631, April.
    • Handle: RePEc:spr:annopr:v:347:y:2025:i:1:d:10.1007_s10479-023-05488-y
    DOI: 10.1007/s10479-023-05488-y
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    More about this item

    Keywords

    Operational risk; Operational losses; Energy companies; Event study;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • Q49 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Other

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