Election returns as a signal of changing regulatory climate

Butler, Michael R.; McNertney, Edward M.

doi:10.1016/0140-9883(91)90055-5

Cited by 7 publications

(4 citation statements)

References 13 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…If information has been available before the event, which is often the case, abnormal returns should not occur as the news is already priced in by the financial markets. Many of those studies have important features in common with our own analysis: Often, electric utility stocks are analysed (Butler and McNertney, 1991, Diltz, 2002, Kahn and Knittel, 2003, Oberndorfer and Ziegler, 2006. Besides that, those papers have in common with the assessment conducted here that they assess the influence of a general shock related to resource, energy, or environmental economics on stock returns.…”

Section: Literature Reviewmentioning

confidence: 97%

Lost in Transmission? Stock Market Impacts of the 2006 European Gas Crisis

2007

View full text Add to dashboard Cite

Recently, energy security in Western Europe seems to be at risk. Around the turn of the year 2005/2006, the Russian freezing of natural gas exports to and via the Ukraine led to a European gas crisis, triggering off intensive debates about energy security all over Europe. Using an event study approach, we assess whether or not the Russian announcement of suspension of gas deliveries, this suspension itself as well as its withdrawal had an impact on West European utilities' as well as oil and gas companies' stocks. Besides the intention of putting the phenomenon of energy security on the agenda of economists dealing with financial markets, this paper should contribute to the methodological enhancements of event studies in the field of resource and environmental economics. In this respect, besides looking at stock returns, we consider autoregressive conditional heteroskedasticity in our methodological framework and assess event impacts on return volatility. We find that the announcement of the crisis accompanied by resource and electricity price increases and therefore a rise of Western Europe's energy risk and costs tended to increase market expectations with respect to energy-related firms. The renewal of gas deliveries increased market uncertainty. One factor behind these findings could be windfall profits of energy-related companies due to increasing resource and electricity prices. All in all, our results suggest that energy policy does not have to bear in mind negative effects for energyrelated firms in situations when security of energy supply is in danger. In contrast, our findings indicate that the energy sector may even profit from energy crises that induce resource price hikes. Given this, it is far from surprising that policy generally considers energy supply as a matter of public concern that should not fully be left to the strategic calculus of private companies.

show abstract

Section: Literature Reviewmentioning

confidence: 97%

Lost in Transmission? Stock Market Impacts of the 2006 European Gas Crisis

2007

View full text Add to dashboard Cite

show abstract

“…Indeed, many energy regulations are debated in the political arena over a long time, so that accompanying wealth effects generally are gradually incorporated into the value of a corporation (Binder 1985). In this respect, event study analyses of elections (Butler/ McNertney 1991, Kahn/Knittel 2003, which are expected to affect energy policy and whose results are uncertain, seem to be attractive. We specifically apply the three-factor model of Fama and French (1993) to estimate the abnormal stock returns in our event study of the 2002 Bundestag elections.…”

Section: Introductionmentioning

confidence: 99%

2002 German Federal Elections and Associated Energy Policy: How Were Energy Corporations Financially Affected?

Oberndorfer¹,

Ziegler²

2018

Energyo

View full text Add to dashboard Cite

This paper analyzes the effect of the 2002 German federal elections to the Lower House of Parliament (Bundestag) on the financial performance of German energy corporations. We consider the last minute victory of the government coalition consisting of Social Democrats and the Green party which was generally associated with a major shift in energy policy towards the promotion of renewable energies and a phasing out of nuclear energy. Our event study approach is based on the application of the Fama-French three-factor model to estimate abnormal stock returns. The results of the empirical analysis imply neither for traditional utilities nor for renewable energy corporations any robust positive or negative impact of the elections and therefore of the general energy policy direction of the government in the next legislative period. * We would like to thank two anonymous referees and the managing editor Peter Winker for their very helpful comments. Our special thanks go to Richard Stehle and Anja Schulz from Humboldt University Berlin for providing the carefully controlled and edited financial data. We furthermore would like to thank participants of different conferences as well as

show abstract

“…One early event study analyzing the effect of environmental regulation can be found in Butler and McNertney (1991). This study even considers the effect of elections, namely the 1982 state-wide gubernatorial elections in six US states.…”

Section: Environmental Event Studiesmentioning

confidence: 99%

“…Only some of them estimate the abnormal returns at once by including dummy variables in the OLS regression (Butler and McNertney, 1991, Blacconiere and Northcut, 1997, Kahn and Knittel, 2003. Furthermore, most studies (and in fact all studies cited above except Tawil, 1999, who use a multifactor model) apply versions of the market model or the one-factor model based on the CAPM and the market model with daily data.…”

Section: Environmental Event Studiesmentioning

confidence: 99%

Environmentally Oriented Energy Policy and Stock Returns: An Empirical Analysis

Oberndorfer

Ziegler

2006

SSRN Journal

View full text Add to dashboard Cite

Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp06079.pdf Non-technical SummaryThis paper examines the effect of environmental regulation on stock returns (as a measure of economic performance) for German energy corporations. By using event study methodology (including insights from modern empirical finance and therefore also applying the Fama- German environmental and particularly energy policy, the result of the elections was crucial:While the "red-green" coalition was generally associated with a paradigm shift towards the promotion of renewable energies and a phasing out of nuclear energy, the "black-yellow" opposition signaled different priorities in line with traditional energy policy.The main estimation results of the empirical analysis imply (1) no evidence of a general negative impact of the 2002 Bundestag elections on stock returns for traditional utilities and (2) a positive albeit transitory short-run effect for the entire group of renewable energy corporations. We conclude that the 2002 Bundestag elections and therefore stringent environmental regulation had at least no general negative effect on the economic performance of energy corporations. One reason for the insignificant abnormal stock returns could be that the environmentally oriented energy policy of the acting government was anticipated by the capital markets before the 2002 Bundestag elections even though the result of the elections was fully unpredictable. In this respect, it should be noted that Social Democrats and the Green party already formulated their environmental policy at the beginning of the legislation period in 1998 in the contract stating the political agenda of the coalition and in the following passed some corresponding laws. Therefore, it could be presumed that the traditional utilities reacted to comply with this environmental regulation by investing in new sustainable energies and technologies between 1998 and 2002. Another reason could be that the compliance costs of this energy policy were lower than expected or even negligible since the traditional utilities could excuse increases in electricity prices by the "green" policy of the government coalition.In this case, compliance costs could have been entirely borne by the final consumers of electricity also due to their low price elasticity of demand. Environmentally Oriented Energy Policy and Stock Returns:An Empirical Analysis AbstractThis paper analyzes the effect of environmen...

show abstract

Election returns as a signal of changing regulatory climate

Cited by 7 publications

References 13 publications

Lost in Transmission? Stock Market Impacts of the 2006 European Gas Crisis

Lost in Transmission? Stock Market Impacts of the 2006 European Gas Crisis

2002 German Federal Elections and Associated Energy Policy: How Were Energy Corporations Financially Affected?

Environmentally Oriented Energy Policy and Stock Returns: An Empirical Analysis

Contact Info

Product

Resources

About