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THE EFFECT OF CORPORATE STRATEGY AND REGULATION ON THE RISK OF ELECTRIC UTILITIES

Scott W. Geiger (University of South Florida)
Howard Rasheed (University of South Florida)
James J. Hoffman (Texas Tech University)
Robert J. Williams (University of North Alabama)

The International Journal of Organizational Analysis

ISSN: 1055-3185

Article publication date: 1 February 2001

192

Abstract

Very little is known about the influences of corporate strategy and regulation on the risk of regulated firms. The current study addresses this gap by examining the relationship among the level of diversification, the regulatory environment, and risk levels of regulated electric utility companies. Results suggest that both the regulatory environment and level of diversification impact firm risk. Specifically, the regulatory environment in which a firm operates moderates the relationship between diversification and risk. Electric utilities operating in the least favorable regulatory environments benefited the most from diversification in terms of risk reduction, while electric utilities in the most favorable regulatory environments experienced increases in risk from diversification. These findings extend previous studies by showing how both the regulatory environment and corporate strategy impact the risk of regulated utilities.

Citation

Geiger, S.W., Rasheed, H., Hoffman, J.J. and Williams, R.J. (2001), "THE EFFECT OF CORPORATE STRATEGY AND REGULATION ON THE RISK OF ELECTRIC UTILITIES", The International Journal of Organizational Analysis, Vol. 9 No. 2, pp. 172-186. https://doi.org/10.1108/eb028932

Publisher

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MCB UP Ltd

Copyright © 2001, MCB UP Limited

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