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The Brazilian Electricity Energy Market: The Role of Regulatory Content Intensity and Its Impact on Capital Shares Risk

Author

Listed:
  • Marin s Taffarel

    (Business School, Pontifical Catholic University of Paran - PUCPR, Curitiba, Brazil.)

  • Wesley Vieira da Silva

    (Business School, Pontifical Catholic University of Paran - PUCPR, Curitiba, Brazil.)

  • Ademir Clemente

    (Department of Accounting, Federal University of Paran - UFPR, Curitiba, Brazil)

  • Claudimar Pereira da Veiga

    (Business School, PPAD, Pontifical Catholic University of Paran - PUCPR, Curitiba, Brazil.)

  • Jansen Maia Del Corso

    (Business School, PPAD, Pontifical Catholic University of Paran - PUCRP, Curitiba, Brazil.)

Abstract

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.

Suggested Citation

  • Marin s Taffarel & Wesley Vieira da Silva & Ademir Clemente & Claudimar Pereira da Veiga & Jansen Maia Del Corso, 2015. "The Brazilian Electricity Energy Market: The Role of Regulatory Content Intensity and Its Impact on Capital Shares Risk," International Journal of Energy Economics and Policy, Econjournals, vol. 5(1), pages 288-304.
    • Handle: RePEc:eco:journ2:2015-01-22
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    References listed on IDEAS

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    Cited by:

    1. Marcos Gon alves Perroni & S rgio Eduardo Gouv a da Costa & S rgio Eduardo Gouv a da Costa & Wesley Vieira da Silva & Edson Pinheiro de Lima & Edson Pinheiro de Lima & Claudimar Pereira da Veiga & Cla, 2016. "Analysis of Income Elasticities of Brazil s Energy Matrix," International Journal of Energy Economics and Policy, Econjournals, vol. 6(3), pages 431-441.

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    More about this item

    Keywords

    Market Model; Capital Asset Pricing Model; Laws;
    All these keywords.

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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