The Impact of Vertical Integration and Horizontal Diversification on the Value of Energy Firms

Carlo Pozzi and Philippe Vassilopoulos

Chapter 11 in The Econometrics of Energy Systems, 2007, pp 225-253 from Palgrave Macmillan

Abstract: Abstract We analyse the long-run return performance of 27 value-weighted equity portfolios based on a classification of the US energy sector that follows traditional industrial organization categories. When adjusted to market and fuel risks, portfolio returns show that both vertical integration and horizontal diversification failed to produce shareholder value during the 1990–2003 period. This confirms the theoretical predictions of both financial economics and industrial organization and shows that the wave of corporate restructuring that has interested US energy industries over the last decade may have occurred at a net cost to firm shareholders.

Keywords: Ordinary Little Square; Vertical Integration; Fuel Price; Portfolio Return; Ordinary Little Square Estimation (search for similar items in EconPapers)
Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-62631-7_11

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DOI: 10.1057/9780230626317_11

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