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The effect of the Fukushima nuclear accident on stock prices of electric power utilities in Japan

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  • Kawashima, Shingo
  • Takeda, Fumiko

Abstract

The purpose of this study is to investigate the effect of the accident at the Fukushima Daiichi nuclear power station, which is owned by Tokyo Electric Power Co. (TEPCO), on the stock prices of the other electric power utilities in Japan. Because the other utilities were not directly damaged by the Fukushima nuclear accident, their stock price responses should reflect the change in investor perceptions on risk and return associated with nuclear power generation. Our first finding is that the stock prices of utilities that own nuclear power plants declined more sharply after the accident than did the stock prices of other electric power utilities. In contrast, investors did not seem to care about the risk that may arise from the use of the same type of nuclear power reactors as those at the Fukushima Daiichi station. We also observe an increase of both systematic and total risks in the post-Fukushima period, indicating that negative market reactions are not merely caused by one-time losses but by structural changes in society and regulation that could increase the costs of operating a nuclear power plant.

Suggested Citation

  • Kawashima, Shingo & Takeda, Fumiko, 2012. "The effect of the Fukushima nuclear accident on stock prices of electric power utilities in Japan," Energy Economics, Elsevier, vol. 34(6), pages 2029-2038.
    • Handle: RePEc:eee:eneeco:v:34:y:2012:i:6:p:2029-2038
    DOI: 10.1016/j.eneco.2012.08.005
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    References listed on IDEAS

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    1. Hill, Joanne & Schneeweis, Thomas, 1983. "The Effect of Three Mile Island on Electric Utility Stock Prices: A Note," Journal of Finance, American Finance Association, vol. 38(4), pages 1285-1292, September.
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    1. Guangxi Cao & Wei Xu & Yu Guo, 2015. "Effects of climatic events on the Chinese stock market: applying event analysis," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 77(3), pages 1979-1992, July.
    2. Kollias Christos & Papadamou Stephanos & Psarianos Iacovos, 2014. "Rogue State Behavior and Markets: the Financial Fallout of North Korean Nuclear Tests," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 20(2), pages 267-292, April.
    3. Valizadeh, Pourya & Karali, Berna & Ferreira, Susana, 2017. "Ripple effects of the 2011 Japan earthquake on international stock markets," Research in International Business and Finance, Elsevier, vol. 41(C), pages 556-576.
    4. Gunther Capelle-Blancard & Aurélien Petit, 2019. "Every Little Helps? ESG News and Stock Market Reaction," Journal of Business Ethics, Springer, vol. 157(2), pages 543-565, June.
    5. Avik Ghosh & Suvajit Banerjee, 2023. "Exploring the Relevance of Crude Oil Prices and Installed Generation Capacity in Prognosticating the NIFTY Energy Index," Millennial Asia, , vol. 14(4), pages 560-581, December.
    6. Hsiao, Cody Yu-Ling & Chen, Hsing Hung, 2018. "The contagious effects on economic development after resuming construction policy for nuclear power plants in Coastal China," Energy, Elsevier, vol. 152(C), pages 291-302.
    7. Zhengru Tao, 2014. "Short-term economic effect of the M7.0 Lushan Earthquake," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 70(2), pages 1247-1261, January.
    8. Fdez-Galiano, Inés Merino & Feria-Dominguez, José Manuel, 2024. "Do ESG disclosures mitigate investors’ reaction on mining disasters? Evidence from Brazil," The Quarterly Review of Economics and Finance, Elsevier, vol. 95(C), pages 256-267.
    9. Yashraj Varma & Renuka Venkataramani & Parthajit Kayal & Moinak Maiti, 2021. "Short-Term Impact of COVID-19 on Indian Stock Market," JRFM, MDPI, vol. 14(11), pages 1-15, November.
    10. Zheng, Shanshan & Wang, Derek D., 2024. "The local economic impacts of mega nuclear accident: A synthetic control analysis of Fukushima," Economic Modelling, Elsevier, vol. 136(C).
    11. Grossi, Luigi & Waterson, Michael, 2013. "German Energy Market Fallout from the Japanese Earthquake," CAGE Online Working Paper Series 157, Competitive Advantage in the Global Economy (CAGE).
    12. Evgenidis, Anastasios & Hamano, Masashige & Vermeulen, Wessel N., 2021. "Economic consequences of follow-up disasters: Lessons from the 2011 Great East Japan Earthquake," Energy Economics, Elsevier, vol. 104(C).
    13. Jan Goebel & Christian Krekel & Tim Tiefenbach & Nicolas Ziebarth, 2015. "How natural disasters can affect environmental concerns, risk aversion, and even politics: evidence from Fukushima and three European countries," Journal of Population Economics, Springer;European Society for Population Economics, vol. 28(4), pages 1137-1180, October.
    14. George Halkos & Argyro Zisiadou, 2020. "An Overview of the Technological Environmental Hazards over the Last Century," Economics of Disasters and Climate Change, Springer, vol. 4(2), pages 411-428, July.
    15. Reboredo, Juan C. & Wen, Xiaoqian, 2015. "Are China’s new energy stock prices driven by new energy policies?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 45(C), pages 624-636.
    16. Lopatta, Kerstin & Kaspereit, Thomas, 2014. "The cross-section of returns, benchmark model parameters, and idiosyncratic volatility of nuclear energy firms after Fukushima Daiichi," Energy Economics, Elsevier, vol. 41(C), pages 125-136.
    17. Corbet, Shaen & Larkin, Charles & McMullan, Caroline, 2018. "Chemical industry disasters and the sectoral transmission of financial market contagion," Research in International Business and Finance, Elsevier, vol. 46(C), pages 490-501.

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    More about this item

    Keywords

    Nuclear accident; Electric power utility; Capital markets;
    All these keywords.

    JEL classification:

    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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