The Brazilian Electricity Energy Market: The Role of Regulatory Content Intensity and Its Impact on Capital Shares Risk

Authors

  • Marinês Taffarel Business School, PPAD, Pontifical Catholic University of Paraná - PUCPR, Curitiba, Brazil
  • Wesley Vieira Da Silva Business School, PPAD, Pontifical Catholic University of Paraná - PUCPR, Curitiba, Brazil
  • Ademir Clemente Federal University of Paraná - UFPR, Curitiba, Brazil
  • Claudimar Pereira Da Veiga Business School, PPAD, Pontifical Catholic University of Paraná - PUCPR, Curitiba, Brazil
  • Jansen Maia Del Corso Business School, PPAD, Pontifical Catholic University of Paraná - PUCPR, Curitiba, Brazil

Abstract

This study analyzes the risk related effect of content intensity in regulatory legislation on the shares of the companies operating in the Brazilian electricity energy market. For this analysis, the regulatory legislation, enshrined in the Federal Constitution of 1988 until 2013 and addressed to the market, was captured and selected using the Markov Regime Switching model of Regime Change. The intensity of Regulatory Content (RC) in each legislative action was quantified through the content analysis technique. The results suggest that, when classified in event families, the risk impact on shares is different and gradual. Further, the individual analyses of the different types of events, classified according to the RC intensity, show that strong and average intensity events have a higher impact on the risk factors of shares of the companies that constitute the sector. Conversely, political or institutional decisions that have low intensity of RC are not perceived as significant in the market. As research contribution, the results presented confirm that regulatory events must be differentiated by type, since they have varying influences on regulatory risk. Moreover, this study demonstrates that the RC intensity is important, and in this case, the higher its presence, the greater the impact of the potential risk on the regulated sector’s shares.

Keywords: Market Model; Capital Asset Pricing Model; Laws

JEL Classifications: E3; G38; K23; M48; Q4

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Author Biographies

Marinês Taffarel, Business School, PPAD, Pontifical Catholic University of Paraná - PUCPR, Curitiba, Brazil

Post graduate program in management - PPAD

Wesley Vieira Da Silva, Business School, PPAD, Pontifical Catholic University of Paraná - PUCPR, Curitiba, Brazil

Post graduate program in management - PPAD

Ademir Clemente, Federal University of Paraná - UFPR, Curitiba, Brazil

Department of Accounting

Claudimar Pereira Da Veiga, Business School, PPAD, Pontifical Catholic University of Paraná - PUCPR, Curitiba, Brazil

Post graduate program in management - PPAD

Jansen Maia Del Corso, Business School, PPAD, Pontifical Catholic University of Paraná - PUCPR, Curitiba, Brazil

Post graduate program in management - PPAD

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Published

2015-01-02

How to Cite

Taffarel, M., Da Silva, W. V., Clemente, A., Da Veiga, C. P., & Del Corso, J. M. (2015). The Brazilian Electricity Energy Market: The Role of Regulatory Content Intensity and Its Impact on Capital Shares Risk. International Journal of Energy Economics and Policy, 5(1), 288–304. Retrieved from https://www.econjournals.com/index.php/ijeep/article/view/1032

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