Efficiency and Mergers and Acquisitions of Electric Utility Companies

Mika Goto (), Tadaaki Tomikawa and Toshiyuki Sueyoshi
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Mika Goto: School of Environment and Society, Tokyo Institute of Technology, 3-3-6 Shibaura, Minato-ku, Tokyo 108-0023, Japan
Tadaaki Tomikawa: School of Environment and Society, Tokyo Institute of Technology, 3-3-6 Shibaura, Minato-ku, Tokyo 108-0023, Japan
Toshiyuki Sueyoshi: School of Environment and Society, Tokyo Institute of Technology, 3-3-6 Shibaura, Minato-ku, Tokyo 108-0023, Japan

Energies, 2024, vol. 17, issue 8, 1-17

Abstract: Since the 1990s, market liberalization of the electricity industry has advanced all around the world. To survive in the drastically changing business environment, incumbent electric utility companies have conducted operational reforms, including Mergers and Acquisitions (M&As), to enhance and/or complement existing business capabilities. The purpose of this study was to measure the operational efficiencies of 31 of the world’s largest electric utility companies using data from 2010 to 2020 and examine regional differences in and the impacts of M&As on the efficiencies. For this purpose, we applied a new type of Data Envelopment Analysis (DEA) and Tobit model regression. We provide findings from the empirical analyses and discuss the business implications of M&As for electric utility companies. The operational efficiency measures were different among regions, but did not show statistically significant changes over the study period from 2010 to 2020. Furthermore, the results of regression analyses indicate that the increasing number of M&A buying transactions and M&A total transactions has a negative marginal impact on the operational efficiency or leads to a lower operational efficiency for utility companies. Since electricity utility companies have not received gains in operational efficiency from increasing the number of M&A transactions, they need to be more cautious about whether M&A transactions can provide value to the operation and technology management.

Keywords: electric utility companies; data envelopment analysis; operational efficiency; regional difference; mergers and acquisitions (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2024
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