Determinants of risk: electric utilities pre- and post-deregulation era

Helena Rados-Derr, Mukesh K. Chaudhry and Robert J. Boldin

Applied Financial Economics, 2014, vol. 24, issue 22, 1439-1448

Abstract: This article explains how the Energy Policy Act of 1992 had impacted electric utilities in the United States. Three time periods were used reflecting data pre- and post-deregulation to better assess the effects that could have arisen from the Act. The cross-sectional data consists of 34 electric utilities with three dependent variables and five independent variables. Dependent variables include beta, total risk and idiosyncratic risk. Independent variables include SD of operating margin, return on total assets, asset turnover, financial leverage and liquidity ratio. Descriptive statistics indicate more improved electric utilities, vis-�-vis asset basis, in the years between 2009 and 2010. Furthermore, regression analysis indicates that out of all three dependent variables, idiosyncratic risk is the most important type of risk following the Energy Policy Act of 1992.

Date: 2014
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DOI: 10.1080/09603107.2014.925069

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