The Shareholder Value Effect of System Overloads: An Analysis of Investor Responses to the 2003 Blackout in the US

<p>This study investigates the stock price reaction of electric energy utility firms to the 2003 blackout in the Northeast of the USA and if the market was able to identify the responsible firm. Therefore, we employ event study methodology and select a sample of US-based electric energy utilit...

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Autores principales:	Yassin Denis Bouzzine, Rainer Lueg
Formato:	article
Lenguaje:	EN
Publicado:	EconJournals 2021
Materias:	Environmental sciences GE1-350 Energy industries. Energy policy. Fuel trade HD9502-9502.5
Acceso en línea:	https://doaj.org/article/9a300f2f0a464840b8a256ac513ac45d
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spelling	oai:doaj.org-article:9a300f2f0a464840b8a256ac513ac45d2021-11-12T07:27:32ZThe Shareholder Value Effect of System Overloads: An Analysis of Investor Responses to the 2003 Blackout in the US2146-4553https://doaj.org/article/9a300f2f0a464840b8a256ac513ac45d2021-11-01T00:00:00Zhttps://econjournals.com/index.php/ijeep/article/view/11756https://doaj.org/toc/2146-4553<p>This study investigates the stock price reaction of electric energy utility firms to the 2003 blackout in the Northeast of the USA and if the market was able to identify the responsible firm. Therefore, we employ event study methodology and select a sample of US-based electric energy utility firms. Although it took a commission almost eight months to name the firm responsible for the blackout, investors punished FirstEnergy only two trading days after the blackout - and were right, as it later turned out. This study demonstrates this based on the analysis of abnormal stock returns and abnormal trading volumes. Our findings suggest that investors have extensive knowledge of electric energy utility firms’ responsibility as they were able to identify the culprit. This, in turn, demonstrates that electric power utility firms should ensure a high-quality grid infrastructure to avoid these negative outcomes.</p><p><strong>Keywords:</strong> Event study; Blackout; System overload; Market efficiency</p><p><strong>JEL Classifications:</strong><strong> </strong>G1, Q40 </p><p>DOI: <a href="https://doi.org/10.32479/ijeep.11756">https://doi.org/10.32479/ijeep.11756</a></p>Yassin Denis BouzzineRainer LuegEconJournalsarticleEnvironmental sciencesGE1-350Energy industries. Energy policy. Fuel tradeHD9502-9502.5ENInternational Journal of Energy Economics and Policy, Vol 11, Iss 6, Pp 538-543 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	Environmental sciences GE1-350 Energy industries. Energy policy. Fuel trade HD9502-9502.5
spellingShingle	Environmental sciences GE1-350 Energy industries. Energy policy. Fuel trade HD9502-9502.5 Yassin Denis Bouzzine Rainer Lueg The Shareholder Value Effect of System Overloads: An Analysis of Investor Responses to the 2003 Blackout in the US
description	<p>This study investigates the stock price reaction of electric energy utility firms to the 2003 blackout in the Northeast of the USA and if the market was able to identify the responsible firm. Therefore, we employ event study methodology and select a sample of US-based electric energy utility firms. Although it took a commission almost eight months to name the firm responsible for the blackout, investors punished FirstEnergy only two trading days after the blackout - and were right, as it later turned out. This study demonstrates this based on the analysis of abnormal stock returns and abnormal trading volumes. Our findings suggest that investors have extensive knowledge of electric energy utility firms’ responsibility as they were able to identify the culprit. This, in turn, demonstrates that electric power utility firms should ensure a high-quality grid infrastructure to avoid these negative outcomes.</p><p><strong>Keywords:</strong> Event study; Blackout; System overload; Market efficiency</p><p><strong>JEL Classifications:</strong><strong> </strong>G1, Q40 </p><p>DOI: <a href="https://doi.org/10.32479/ijeep.11756">https://doi.org/10.32479/ijeep.11756</a></p>
format	article
author	Yassin Denis Bouzzine Rainer Lueg
author_facet	Yassin Denis Bouzzine Rainer Lueg
author_sort	Yassin Denis Bouzzine
title	The Shareholder Value Effect of System Overloads: An Analysis of Investor Responses to the 2003 Blackout in the US
title_short	The Shareholder Value Effect of System Overloads: An Analysis of Investor Responses to the 2003 Blackout in the US
title_full	The Shareholder Value Effect of System Overloads: An Analysis of Investor Responses to the 2003 Blackout in the US
title_fullStr	The Shareholder Value Effect of System Overloads: An Analysis of Investor Responses to the 2003 Blackout in the US
title_full_unstemmed	The Shareholder Value Effect of System Overloads: An Analysis of Investor Responses to the 2003 Blackout in the US
title_sort	shareholder value effect of system overloads: an analysis of investor responses to the 2003 blackout in the us
publisher	EconJournals
publishDate	2021
url	https://doaj.org/article/9a300f2f0a464840b8a256ac513ac45d
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The Shareholder Value Effect of System Overloads: An Analysis of Investor Responses to the 2003 Blackout in the US

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