European energy industry shocks, corporate control and firms' value

John J. García () and Francesc Trillas

No 10928, Documentos de Trabajo de Valor Público from Universidad EAFIT

Abstract: The deregulation process in the EU electricity sector triggered strategic decisions that led to industry restructuring. This paper presents preliminary evidence of the impact of this process on investors, using event studies and estimation techniques such as least squares and GARCH. Our findings suggest three stylized facts: 1) regulatory reform in Europe was certainly accompanied by a takeover wave, as predicted by Mitchell and Mulherin (1996); 2) mergers and acquisitions had a positive impact on the stock price of target firms, and a much lower and sometimes even a negative impact for the bidding firms; 3) the effect of takeover announcements on the returns of competitors of the merging firms depends on the degree of market power. In countries with high market power (like Spain) competitors significantly increase share returns upon takeover announcements, whereas in countries with lower market power (like England and Wales) returns do not change significantly.

Keywords: Deregulation; mergers and acquisitions; event study; energy (search for similar items in EconPapers)
JEL-codes: G14 G34 G38 L94 (search for similar items in EconPapers)
Date: 2013-11-12
New Economics Papers: this item is included in nep-cfn, nep-ene and nep-eur
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