Eco-efficiency outcomes of mergers and acquisitions in the European electricity industry

Monastyrenko, Evgenii

doi:10.1016/j.enpol.2017.04.030

Cited by 51 publications

(18 citation statements)

References 103 publications

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“…During the period 2005-2016, we identified 22 mergers or acquisitions involving 44 out of an average 79 Ontario electric distribution utilities operating during those years. Various studies have measured the effects of mergers or acquisitions for various pre and post-merger/acquisition periods ranging from two to five years (Kwoka and Pollitt, 2010; Ismail, 2011; Maksimovic et al , 2011; Alhenawi and Krishnaswami, 2015; Buckland et al , 2015; Rani et al , 2015; Monastyrenko, 2017; Qian and Zhu, 2017). The use of multiple year periods allows for avoidance of the “polished apple” effect, where firms seeking to be acquired enhance their value in the period leading up to the merger or acquisition and recognize that integration efforts to capture synergies post-merger/acquisition can take some time to implement after the transaction.…”

Section: Methodsmentioning

confidence: 99%

“…Very recently, with concerns regarding the environmental impact of the industry, there have been a number of studies related to public utility eco-efficiency post-merger or acquisition and they too have identified the concept of synergies. These include Monastyrenko’s (2017) review of 129 mergers and acquisitions in the European electricity industry between 2004 and 2013. In that study, he concluded that regulated domestic mergers did not achieve the expected synergy gains associated with the ecological efficiency (CO 2 emissions) of their operations.…”

Section: Literature Reviewmentioning

confidence: 99%

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Determining the efficacy of consolidating municipal electric utilities in Ontario, Canada

Walsh

Ajibade

2019

IJESM

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Purpose This paper aims to examine empirically if the encouragement by government policy of merger and acquisition activity involving municipal and provincially owned electricity distribution utilities (LDCs) in the Province of Ontario has had positive effects in terms of value creation, operating performance and economies of scale. Design/methodology/approach It was anticipated that with LDC consolidation, there will be increased operational efficiency and improvement in the cost-effectiveness of the merged electrical utility. Using matched pairs dependent t-testing and Wilcoxon signed-rank testing, the authors compared data for three years before and after the merger or acquisition of 16 municipal utilities (616 total observations) to determine if there were any statistically significant changes (positive or negative) in measures of financial, operational and service efficiency. Findings The findings indicate statistically significant increases in debt as a percentage of shareholder equity in post-merger/acquisition utilities and consequently leveraged higher returns on equity. However, there were no statistically significant changes in financial, operational or service efficiency measures (with the exception of decreased efficiency in telephone response). Research limitations/implications A total of 16 mergers or acquisitions were reviewed involving 32 of 79 LDCs, with the research implications pointing to a need for existing policy to be reviewed to determine whether a more detailed examination is required by the provincial energy regulator, including a closer examination of managerial motives, before approving mergers between municipal electricity distributors. This research involves only a quantitative approach and further research would examine these transactions using qualitative measures for a deeper examination as to managerial motives. Practical implications The results suggest that the mergers or acquisitions to date have served only to increase shareholder risk without improvement in other financial, operational or service efficiencies, a contradiction to the rationale behind the Province’s merger policy. Social implications The consolidation policy for Ontario LDCs has not resulted in any statistically significant improvement in electricity rates or service for consumers. Originality/value This paper is the first examination of the effects of Ontario’s LDC consolidation policy in terms of specific financial, operational and service efficiency measures.

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Section: Methodsmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

Determining the efficacy of consolidating municipal electric utilities in Ontario, Canada

Walsh

Ajibade

2019

IJESM

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“…Gugler and Siebert (2007) and Lee (2013) used DEA to evaluate the performance of semiconductor manufacturers after M&As, and the results showed that postmerger operating performance did improve. Monastyrenko (2017) addressed the effects of M&As on the eco-efficiency of European electricity producers in 2005-2013, computing eco-efficiency using DEA and the Malmquist-Luenberger productivity index, both of which are based on the radial directional distance function. However, to reduce the failure of M&As, it is necessary to reasonably predict their efficiency in advance.…”

Section: Literature Reviewmentioning

confidence: 99%

Prevaluating Technical Efficiency Gains From Potential Mergers and Acquisitions in China’s Coal Industry

Chiu

Bin

2020

Sage Open

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With the slowdown of its economic growth, China’s domestic coal industry is facing more and more serious overcapacity. Multiple government departments have jointly proposed that the coal industry should undergo mergers and reorganization to ease this overcapacity, enhance industrial concentration, and optimize production layout. This study thus combines the resample slacks-based measure (SBM) model and potential merger gains model to pre-evaluate the gains from potential mergers and acquisitions (M&As) before making any final decision about them. With a focus on prevaluating efficiency gains before potential M&As instead of efficiency gains after them, we take China’s listed companies in the coal mining and washing industry as the research sample. The data used to evaluate the efficiency from potential M&As come from their annual financial reports from 2013 to 2016. Empirical results show that some mergers of listed coal companies lead to improved efficiency, but not all mergers can bring efficiency improvements. We also find that the most efficient companies are not necessarily the best M&A targets, and that companies suitable for M&As are those in the stage of expansion. In addition, the empirical results confirm that combinations between large coal companies and between cross-listing companies are more efficient.

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“…To overcome this issue, Chung et al (1997) developed the Malmquist-Luenberger productivity index (MLPI) based on DDFs that takes into consideration simultaneously the desirable and undesirable outputs. The MLPI has been widely used in environmental productivity studies (e.g., Arabi et al, 2017;Bampatsou & Halkos, 2018;Jeon & Sickles, 2004;Kumar, 2006;Liu et al, 2018;Monastyrenko, 2017;Munisamy & Arabi, 2015;Shen et al, 2019;Song et al, 2017;Wang et al, 2013;Wei et al, 2019;Yörük & Zaim, 2005;C. Zhang et al, 2011).…”

Section: Introductionmentioning

confidence: 99%

Total Factor Environmental Productivity in the Mediterranean Countries: A Malmquist–Luenberger Index Approach

Jebali¹,

Essid²

2020

IJAMT

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This paper examines the environmental productivity in the Mediterranean countries over the period 2009-2014.We use the Malmquist-Luenberger productivity index (MLPI) that can handle undesirable outputs within Data Envelopment Analysis (DEA) approach. We decompose the MLPI index into technical efficiency, technological change and scale efficiency change in order to determine the source of productivity changes. Empirical findings indicate that the total factor environmental productivity in the Mediterranean countries have a negative developmental trend. Furthermore, we find that technological progress is the main source of productivity growth. Finally, Mediterranean countries need a considerable effort on R&D to optimize the potential for technical development and enhance the environmental efficiency levels.

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Eco-efficiency outcomes of mergers and acquisitions in the European electricity industry

Cited by 51 publications

References 103 publications

Determining the efficacy of consolidating municipal electric utilities in Ontario, Canada

Determining the efficacy of consolidating municipal electric utilities in Ontario, Canada

Prevaluating Technical Efficiency Gains From Potential Mergers and Acquisitions in China’s Coal Industry

Total Factor Environmental Productivity in the Mediterranean Countries: A Malmquist–Luenberger Index Approach

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