Market Valuation and Deregulation of Electric Utilities

40 Pages Posted: 20 Sep 1999

See all articles by Walter G. Blacconiere

Walter G. Blacconiere

Indiana University - Kelley School of Business - Department of Accounting

Marilyn F. Johnson

Michigan State University - Department of Accounting & Information Systems

Mark S. Johnson

University of Michigan at Dearborn

Multiple version iconThere are 2 versions of this paper

Date Written: June 17, 1999

Abstract

This study examines the effect of ongoing deregulation in the electric utility industry on the relation between market value, book value, and earnings. We predict that deregulation decreases (increases) the relative importance of book value (earnings) in explaining price. We test this prediction by examining changes in the value-relevance of book value and earnings during the 1988-1996 time period for a sample of large, investor-owned electric utilities. We find that the regression coefficients and incremental explanatory power related to book value (earnings) have decreased (increased) over this time period. These results are generally robust in sensitivity analysis.

JEL Classification: G12, L43, L94, M41

Suggested Citation

Blacconiere, Walter G. and Johnson, Marilyn F. and Johnson, Mark S., Market Valuation and Deregulation of Electric Utilities (June 17, 1999). Available at SSRN: https://ssrn.com/abstract=170089 or http://dx.doi.org/10.2139/ssrn.170089

Walter G. Blacconiere (Contact Author)

Indiana University - Kelley School of Business - Department of Accounting ( email )

1309 E. 10th Street
Bloomington, IN 47405
United States
812-855-2653 (Phone)
812-855-4985 (Fax)

Marilyn F. Johnson

Michigan State University - Department of Accounting & Information Systems ( email )

270 North Business Complex
East Lansing, MI 48824-1034
United States
517-432-0152 (Phone)
517-432-1101 (Fax)

Mark S. Johnson

University of Michigan at Dearborn

4901 Evergreen Road
School of Management Department of Accounting & Finance
Dearborn, MI 48128-1491
United States
313-593-4078 (Phone)
313-593-4071 (Fax)

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