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Operational synergy in the US electric utility industry under an influence of deregulation policy: A linkage to financial performance and corporate value

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  • Sueyoshi, Toshiyuki
  • Goto, Mika

Abstract

Sueyoshi et al. (2009) have examined a synergy effect between electricity and gas services in the US electric utility industry. They have compared electricity-specialized firms with diversified utility firms in their financial performance and corporate value. A problem of their study is that it has not empirically measured the operational performance of the electric utility firms. As an extension of the preceding study, this research investigates the operational performance of 104 US electric utility firms (1990-2004) by fully utilizing DEA (Data Envelopment Analysis). This study finds the three new policy implications. First, the synergy effect has not existed in the operational performance of diversified utility firms before and after the deregulation on the US electricity markets. Thus, core business concentration is more effective for electric utility firms than corporate diversification to enhance their operational performance under the current US deregulation policy. Second, the operational performance has had an increasing trend until 1996 and a decreasing trend after 1996. Thus, the US deregulation policy has been influential on their operational performance. Third, the enhancement in operational performance of electric utility firms has improved their financial performance. The improvement in financial performance has increased their corporate value. Thus, this study finds the business causality among operational performance, financial performance and corporate value in the US electric utility industry.

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  • Sueyoshi, Toshiyuki & Goto, Mika, 2011. "Operational synergy in the US electric utility industry under an influence of deregulation policy: A linkage to financial performance and corporate value," Energy Policy, Elsevier, vol. 39(2), pages 699-713, February.
    • Handle: RePEc:eee:enepol:v:39:y:2011:i:2:p:699-713
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    4. Toshiyuki Sueyoshi & Mika Goto, 2021. "Performance Assessment of Japanese Electricity and Gas Companies during 2002–2018: Three DEA Approaches," Energies, MDPI, vol. 14(6), pages 1-18, March.
    5. Jens Fuhrmann & Reinhard Madlener, 2020. "Evaluation of Synergies in the Context of European Multi-Business Utilities," Energies, MDPI, vol. 13(24), pages 1-41, December.
    6. Sueyoshi, Toshiyuki & Goto, Mika, 2014. "Environmental assessment for corporate sustainability by resource utilization and technology innovation: DEA radial measurement on Japanese industrial sectors," Energy Economics, Elsevier, vol. 46(C), pages 295-307.
    7. Pombo, Carlos & Taborda, Rodrigo, 2006. "Performance and efficiency in Colombia's power distribution system: Effects of the 1994 reform," Energy Economics, Elsevier, vol. 28(3), pages 339-369, May.
    8. Juha Kettunen, 2016. "Relationship Between Mission Statement And Scope Of Business: Evidence From Finland," Review of Business and Finance Studies, The Institute for Business and Finance Research, vol. 7(1), pages 69-78.
    9. Sueyoshi, Toshiyuki & Goto, Mika, 2015. "Environmental assessment on coal-fired power plants in U.S. north-east region by DEA non-radial measurement," Energy Economics, Elsevier, vol. 50(C), pages 125-139.
    10. Karolis Andriuškevičius & Dalia Štreimikienė, 2021. "Developments and Trends of Mergers and Acquisitions in the Energy Industry," Energies, MDPI, vol. 14(8), pages 1-14, April.
    11. Sueyoshi, Toshiyuki & Goto, Mika, 2016. "Undesirable congestion under natural disposability and desirable congestion under managerial disposability in U.S. electric power industry measured by DEA environmental assessment," Energy Economics, Elsevier, vol. 55(C), pages 173-188.
    12. Bai-Chen, Xie & Ying, Fan & Qian-Qian, Qu, 2012. "Does generation form influence environmental efficiency performance? An analysis of China’s power system," Applied Energy, Elsevier, vol. 96(C), pages 261-271.
    13. Sueyoshi, Toshiyuki & Goto, Mika, 2015. "Japanese fuel mix strategy after disaster of Fukushima Daiichi nuclear power plant: Lessons from international comparison among industrial nations measured by DEA environmental assessment in time hori," Energy Economics, Elsevier, vol. 52(PA), pages 87-103.
    14. Sueyoshi, Toshiyuki & Yuan, Yan, 2015. "Comparison among U.S. industrial sectors by DEA environmental assessment: Equipped with analytical capability to handle zero or negative in production factors," Energy Economics, Elsevier, vol. 52(PA), pages 69-86.
    15. Yanmin Shao & Song Han, 2019. "The Synergy in the Economic Production System: An Empirical Study with Chinese Industry," Sustainability, MDPI, vol. 11(4), pages 1-12, February.
    16. Sueyoshi, Toshiyuki & Yuan, Yan, 2016. "Marginal Rate of Transformation and Rate of Substitution measured by DEA environmental assessment: Comparison among European and North American nations," Energy Economics, Elsevier, vol. 56(C), pages 270-287.
    17. Sueyoshi, Toshiyuki & Yuan, Yan, 2015. "China's regional sustainability and diversified resource allocation: DEA environmental assessment on economic development and air pollution," Energy Economics, Elsevier, vol. 49(C), pages 239-256.
    18. Sueyoshi, Toshiyuki & Wang, Derek, 2014. "Radial and non-radial approaches for environmental assessment by Data Envelopment Analysis: Corporate sustainability and effective investment for technology innovation," Energy Economics, Elsevier, vol. 45(C), pages 537-551.
    19. Sueyoshi, Toshiyuki & Wang, Derek, 2014. "Sustainability development for supply chain management in U.S. petroleum industry by DEA environmental assessment," Energy Economics, Elsevier, vol. 46(C), pages 360-374.

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