The Brazilian Electricity Energy Market: The Role of Regulatory Content Intensity and Its Impact on Capital Shares Risk
Wesley Vieira da Silva,
Claudimar Pereira da Veiga and
Jansen Maia Del Corso
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Marinês Taffarel: Business School, Pontifical Catholic University of Paraná - PUCPR, Curitiba, Brazil.
Wesley Vieira da Silva: Business School, Pontifical Catholic University of Paraná - PUCPR, Curitiba, Brazil.
Ademir Clemente: Department of Accounting, Federal University of Paraná - UFPR, Curitiba, Brazil
Claudimar Pereira da Veiga: Business School, PPAD, Pontifical Catholic University of Paraná - PUCPR, Curitiba, Brazil.
Jansen Maia Del Corso: Business School, PPAD, Pontifical Catholic University of Paraná - PUCRP, Curitiba, Brazil.
International Journal of Energy Economics and Policy, 2015, vol. 5, issue 1, 288-304
This study analyzes the risk related effect of content intensity in regulatory legislation on the shares of the companies operating in the Brazilian electricity energy market. For this analysis, the regulatory legislation, enshrined in the Federal Constitution of 1988 until 2013 and addressed to the market, was captured and selected using the Markov Regime Switching model of Regime Change. The intensity of Regulatory Content (RC) in each legislative action was quantified through the content analysis technique. The results suggest that, when classified in event families, the risk impact on shares is different and gradual. Further, the individual analyses of the different types of events, classified according to the RC intensity, show that strong and average intensity events have a higher impact on the risk factors of shares of the companies that constitute the sector. Conversely, political or institutional decisions that have low intensity of RC are not perceived as significant in the market. As research contribution, the results presented confirm that regulatory events must be differentiated by type, since they have varying influences on regulatory risk. Moreover, this study demonstrates that the RC intensity is important, and in this case, the higher its presence, the greater the impact of the potential risk on the regulated sector’s shares.
Keywords: Market Model; Capital Asset Pricing Model; Laws (search for similar items in EconPapers)
JEL-codes: E3 G38 K23 M48 Q4 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eco:journ2:2015-01-22
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