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Political discretion and risk: the Fukushima nuclear disaster, the distribution of global operations, and uranium company valuation

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  • Murod Aliyev
  • Timothy Devinney
  • Andrew Ferguson
  • Peter Lam

Abstract

This paper investigates the relationship between political constraint and investor perception of policy risk using an analysis of the reaction of Australian and Canadian uranium company stocks to the Fukushima nuclear disaster in 2011. Our dataset traces 933 projects of 322 uranium firms located across 36 countries and posits a U-shaped relationship between political constraint and investor perceptions of policy risk. Using an event study methodology as applied to the natural quasi-experiment arising from the event, we link heterogeneous changes in stock returns to the policy risk in the uranium project locations of the firms. The results corroborate the expected relationship and hold even after we control for home-country bias.

Suggested Citation

  • Murod Aliyev & Timothy Devinney & Andrew Ferguson & Peter Lam, 2024. "Political discretion and risk: the Fukushima nuclear disaster, the distribution of global operations, and uranium company valuation," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 33(3), pages 738-761.
    • Handle: RePEc:oup:indcch:v:33:y:2024:i:3:p:738-761.
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