Brownbag Seminar by Prof. Rick Vanden Bergh (University of Vermont)
Event details
| Date | 04.06.2014 |
| Hour | 12:00 › 13:00 |
| Speaker | Prof. Rick Vanden Bergh (University of Vermont) |
| Location | |
| Category | Conferences - Seminars |
Seminar organized by UNIL-HEC
"POLITICAL STRATEGY IN CONTESTED STAKEHOLDER ENVIRONMENTS: EVIDENCE FROM THE ELECTRIC UTILITY SECTOR"
Host(s): Jean-Philippe Bonardi
We examine how and why electric utilities use political strategies to protect economic rents created by mergers and acquisitions against dissipation by regulators and stakeholders. In regulated industries, stakeholders (e.g., special interest groups) can influence regulators who, in turn, can impose costly merger conditions, for instance consumer rate reductions in the utilities sector, thereby reducing shareholder gains. We investigate empirically whether and how utilities use election campaign contributions to politicians as a method to counteract stakeholders and influence regulatory merger approvals. We develop a unique dataset to test our hypotheses. Using utility-specific data we develop a time-varying measure of the degree to which stakeholders influence regulatory policy affecting the utility. Additionally we have identified the timing and economic rent characteristics of every merger and acquisition proposals that require regulatory approval for every state-level operating utility in the United States. We combine this data with utility-level campaign contribution data to create a panel for the time period 1999 to 2010. We conduct a statistical analysis of campaign contributions and find that utilities increased their contributions in the year before announcement of a merger, and that utilities increased their contributions more when facing highly contested stakeholder environments, and when merger rents are expected to be large. Our findings contribute to political strategy research by providing novel evidence that campaign contributions are a form of investment in the political process to mitigate the risk of rent dissipation by both regulators and stakeholders.
"POLITICAL STRATEGY IN CONTESTED STAKEHOLDER ENVIRONMENTS: EVIDENCE FROM THE ELECTRIC UTILITY SECTOR"
Host(s): Jean-Philippe Bonardi
We examine how and why electric utilities use political strategies to protect economic rents created by mergers and acquisitions against dissipation by regulators and stakeholders. In regulated industries, stakeholders (e.g., special interest groups) can influence regulators who, in turn, can impose costly merger conditions, for instance consumer rate reductions in the utilities sector, thereby reducing shareholder gains. We investigate empirically whether and how utilities use election campaign contributions to politicians as a method to counteract stakeholders and influence regulatory merger approvals. We develop a unique dataset to test our hypotheses. Using utility-specific data we develop a time-varying measure of the degree to which stakeholders influence regulatory policy affecting the utility. Additionally we have identified the timing and economic rent characteristics of every merger and acquisition proposals that require regulatory approval for every state-level operating utility in the United States. We combine this data with utility-level campaign contribution data to create a panel for the time period 1999 to 2010. We conduct a statistical analysis of campaign contributions and find that utilities increased their contributions in the year before announcement of a merger, and that utilities increased their contributions more when facing highly contested stakeholder environments, and when merger rents are expected to be large. Our findings contribute to political strategy research by providing novel evidence that campaign contributions are a form of investment in the political process to mitigate the risk of rent dissipation by both regulators and stakeholders.
Practical information
- General public
- Free