An empirical investigation into the association between stock market responses to earnings announcements and regulation of electric utilities
Book
·
OSTI ID:5189685
This paper examines whether stock market responses to quarterly earnings announcements are related to the regulatory environments faced by the announcing firms. This relation is assessed by comparing averages of firm specific earnings response coefficients for firms in different regulatory environments. The first comparison is between averages from a sample of electric utilities and from a random sample of non-regulated firms. The second is between averages from samples of favorably and unfavorably regulated electric utilities, where the assessment of regulatory climate is based on ratings of public utility commissions. Earnings response coefficients are estimated at the individual firm level using weighted least squares regression with multiple-day returns that may be nonsynchronous across firms. Results are consistent with the hypothesis that regulators buffer the firms they regulate from changes in their operating environments. The average earnings response coefficient is smaller for regulated electric utilities than for a random sample of nonregulated firms. The analysis does not support the hypothesis that regulators of electric utilities favor investors or consumers, but suggest that regulators vary in the extent to which they insulate electric utilities from environmental changes.
- Research Organization:
- Chicago Univ., IL (USA)
- OSTI ID:
- 5189685
- Country of Publication:
- United States
- Language:
- English
Similar Records
Accuracy of earnings forecasts for public utilities
Effect of economic regulation on risk and financial performance in the electric utility industry
Revenue and earnings performance masked continuing investor-owned utility problems
Journal Article
·
Wed Nov 22 23:00:00 EST 1978
· Public Util. Fortn.; (United States)
·
OSTI ID:6178480
Effect of economic regulation on risk and financial performance in the electric utility industry
Thesis/Dissertation
·
Sat Dec 31 23:00:00 EST 1983
·
OSTI ID:5727218
Revenue and earnings performance masked continuing investor-owned utility problems
Journal Article
·
Wed Jun 01 00:00:00 EDT 1983
· Electr. Light Power; (United States)
·
OSTI ID:5789236