IDEAS home Printed from https://ideas.repec.org/p/jen/jenasw/2005-07.html
   My bibliography  Save this paper

Consolidation and Market Power of Energy Utilities - The case of US-American and German Utility Takeovers

Author

Listed:
  • Andreas Freytag

    () (University of Jena, Faculty of Economics)

  • Dirk Schiereck

    () (European Business School, Endowed Chair of Banking and Finance)

  • Thomas W. Thomas

    () (Witten/Herdecke University, Dept. of Economics and Management)

Abstract

Between 1990 and 2002 a wave of takeovers was observed in the North American and European energy utilities market. We analyze the impact of these takeovers on market power, studying 70 takeovers of US-American and 69 takeovers of German energy utilities by applying event study methodology. Stock price reactions of acquiring and target firms as well as of their competitors are used as an indicator for market power. While we do not find any significant results pointing in this direction for transactions in the US, our findings clearly indicate that the potential to increase market power is indeed an important motive for takeovers within the German energy utilities market.

Suggested Citation

  • Andreas Freytag & Dirk Schiereck & Thomas W. Thomas, 2005. "Consolidation and Market Power of Energy Utilities - The case of US-American and German Utility Takeovers," Jenaer Schriften zur Wirtschaftswissenschaft (Expired!) 07/2005, Friedrich-Schiller-Universität Jena, Wirtschaftswissenschaftliche Fakultät.
  • Handle: RePEc:jen:jenasw:2005-07
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    References listed on IDEAS

    as
    1. Song, Moon H. & Walkling, Ralph A., 2000. "Abnormal returns to rivals of acquisition targets: A test of the 'acquisition probability hypothesis'," Journal of Financial Economics, Elsevier, vol. 55(2), pages 143-171, February.
    2. Mitchell, Mark L. & Mulherin, J. Harold, 1996. "The impact of industry shocks on takeover and restructuring activity," Journal of Financial Economics, Elsevier, vol. 41(2), pages 193-229, June.
    3. Kim, E Han & Singal, Vijay, 1993. "Mergers and Market Power: Evidence from the Airline Industry," American Economic Review, American Economic Association, vol. 83(3), pages 549-569, June.
    4. Cantner, Uwe & Graf, Holger, 2006. "The network of innovators in Jena: An application of social network analysis," Research Policy, Elsevier, vol. 35(4), pages 463-480, May.
    5. Eckbo, B Espen & Wier, Peggy, 1985. "Antimerger Policy under the Hart-Scott-Rodino Act: A Reexamination of the Market Power Hypothesis," Journal of Law and Economics, University of Chicago Press, vol. 28(1), pages 119-149, April.
    6. Lynne Kiesling, 2004. "The North American blackout and electricity policy: alternatives to transmission construction," Economic Affairs, Wiley Blackwell, vol. 24(1), pages 53-57, March.
    7. Mulherin, J. Harold & Boone, Audra L., 2000. "Comparing acquisitions and divestitures," Journal of Corporate Finance, Elsevier, vol. 6(2), pages 117-139, July.
    8. Mihkel M. Tombak, 2002. "Mergers to Monopoly," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 11(3), pages 513-546, September.
    9. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-329, May.
    10. Brown, Stephen J. & Warner, Jerold B., 1985. "Using daily stock returns : The case of event studies," Journal of Financial Economics, Elsevier, vol. 14(1), pages 3-31, March.
    11. Severin Borenstein & James Bushnell & Frank Wolak, 2000. "Diagnosing Market Power in California's Restructured Wholesale Electricity Market," NBER Working Papers 7868, National Bureau of Economic Research, Inc.
    12. Eckbo, B Espen, 1985. "Mergers and the Market Concentration Doctrine: Evidence from the Capital Market," The Journal of Business, University of Chicago Press, vol. 58(3), pages 325-349, July.
    13. Stillman, Robert, 1983. "Examining antitrust policy towards horizontal mergers," Journal of Financial Economics, Elsevier, vol. 11(1-4), pages 225-240, April.
    14. Roland Helm, 2004. "Export Market Entry Strategy and Success: Conceptual Framework and Empirical Examination," Jenaer Schriften zur Wirtschaftswissenschaft (Expired!) 06/2004, Friedrich-Schiller-Universität Jena, Wirtschaftswissenschaftliche Fakultät.
    15. Brown, Stephen J. & Warner, Jerold B., 1980. "Measuring security price performance," Journal of Financial Economics, Elsevier, vol. 8(3), pages 205-258, September.
    16. S. Baranzoni & P. Bianchi & L. Lambertini, 2000. "Multiproduct Firms, Product Differentiation, and Market Structure," Working Papers 368, Dipartimento Scienze Economiche, Universita' di Bologna.
    17. Aloke Ghosh & Chi-Wen Jevons Lee, 2000. "Abnormal Returns and Expected Managerial Performance of Target Firms," Financial Management, Financial Management Association, vol. 29(1), Spring.
    18. Kathleen Fuller & Jeffry Netter & Mike Stegemoller, 2002. "What Do Returns to Acquiring Firms Tell Us? Evidence from Firms That Make Many Acquisitions," Journal of Finance, American Finance Association, vol. 57(4), pages 1763-1793, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Uwe Cantner & Jens Kruger & Kristina von Rhein, 2011. "Knowledge compensation in the German automobile industry," Applied Economics, Taylor & Francis Journals, vol. 43(22), pages 2941-2951.
    2. Markus Pasche, 2005. "(Self-)Regulation of a Natural Monopoly via Complementary Goods - the Case of F/OSS Business Models," Jenaer Schriften zur Wirtschaftswissenschaft (Expired!) 18/2005, Friedrich-Schiller-Universität Jena, Wirtschaftswissenschaftliche Fakultät.
    3. Simon Renaud, 2006. "Betriebsr�te und Strukturwandel," Jenaer Schriften zur Wirtschaftswissenschaft (Expired!) 04/2006, Friedrich-Schiller-Universität Jena, Wirtschaftswissenschaftliche Fakultät.
    4. Jens J. Krüger, 2008. "The Sources Of Aggregate Productivity Growth: Us Manufacturing Industries, 1958-1996," Bulletin of Economic Research, Wiley Blackwell, vol. 60(4), pages 405-427, October.
    5. Werner Jammernegg & Peter Kischka, 2005. "A Decision Rule Based on the Conditional Value at Risk," Jenaer Schriften zur Wirtschaftswissenschaft (Expired!) 09/2005, Friedrich-Schiller-Universität Jena, Wirtschaftswissenschaftliche Fakultät.
    6. Uwe Cantner & Jens J. Krüger, 2006. "Micro-Heterogeneity and Aggregate Productivity Development in the German Manufacturing Sector - Results from a Decomposition Exercise," Jenaer Schriften zur Wirtschaftswissenschaft (Expired!) 02/2006, Friedrich-Schiller-Universität Jena, Wirtschaftswissenschaftliche Fakultät.
    7. Wolfgang Domschke & Armin Scholl, 2006. "Heuristische Verfahren," Jenaer Schriften zur Wirtschaftswissenschaft (Expired!) 08/2006, Friedrich-Schiller-Universität Jena, Wirtschaftswissenschaftliche Fakultät.
    8. Andreas Freytag & Donato Masciandaro, 2005. "Financial Supervision Fragmentation and Central Bank Independence: The Two Sides of the Same Coin?," Jenaer Schriften zur Wirtschaftswissenschaft (Expired!) 14/2005, Friedrich-Schiller-Universität Jena, Wirtschaftswissenschaftliche Fakultät.
    9. Markus Pasche, 2005. "Das Vertrauensspiel - eine verhaltensorientierte Erklärung," Jenaer Schriften zur Wirtschaftswissenschaft (Expired!) 19/2005, Friedrich-Schiller-Universität Jena, Wirtschaftswissenschaftliche Fakultät.

    More about this item

    Keywords

    acquisitions; energy utilities; market power; oligopoly; regulation;

    JEL classification:

    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jen:jenasw:2005-07. 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: (). General contact details of provider: http://www.wiwi.uni-jena.de/ .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.