Some effects of utility regulation on firm operating elasticity and capital structure
By: Cheng F. Lee, Walter J. Primeaux, Jr
Contributors: Primeaux, Walter J. joint author; University of Illinois at Urbana-Champaign. College of Commerce and Business Administration
Series: Faculty working papers -- no. 534; Faculty working papers -- no. 534.
Publisher: College of Commerce and Business Administration, University of Illinois at Urbana-Champaign
Published: 1978
Place of publication: [Urbana, Ill.]
Language: eng
Number of pages: 32
Description: "An important question involving electric utility firms is how does each firm adjust its capital structure on operating strategy so as to minimize the possible adverse impact of commission regulation upon its performance.  By using both one way and two way analysis of variance, this paper shows that different degrees of regulation do affect operating and financial strategies of electric utility firms. The degree of operating leverage concept is used as a measure of operating elasticity; both balance sheet and income statement leverage ratios were used as indices of financial strategy. It was found that different degrees of utility regulation do affect a firm's operating leverage different regulation also causes a firm to adjust its financial leverage in terms of Ii/Xi to neutralize business risks, to some extent. In addition, strong time effects associated with both operation elasticity and capital structure are also observed."
Notes: Includes bibliographical references (p. 28-29).