University of Illinois Urbana-Champaign

Risk, return and rate base valuation methods : an empirical analysis / BEBR No.872

Bubnys, Edward Leo; Primeaux, Walter J.; Zumwalt, J. Kenton

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https://hdl.handle.net/2142/26658

Description

Title
Risk, return and rate base valuation methods : an empirical analysis / BEBR No.872
Author(s)
  • Bubnys, Edward Leo
  • Primeaux, Walter J.
  • Zumwalt, J. Kenton
Contributor(s)
  • University of Illinois at Urbana-Champaign. College of Commerce and Business Administration
  • University of Illinois at Urbana-Champaign. Bureau of Economic and Business Research
Issue Date
1982-05
Keyword(s)
Economics.
Abstract
  • It has been observed that utility executives generally argue for inflation adjusted rate bases while consumer groups advocate original cost valuation methods. Recent analytic and empirical studies indicate that rate base valuation methods should not and do not account for differences in utilities' realized rates of return. However, there is evidence that CHANGES in valuation methods may cause changes in realized returns due to over or under compensation for the effects of inflation.
  • This study examines the impact of changes in rate base evaluation methods on (1) expected shareholder returns, (2) realized shareholder returns, and (3) systematic risk. A unique time series data set and a new statistical procedure are used. Overall, the results are consistent with earlier studies. However, the results for utilities in one state provide support for the argument that investors fare better under fair value regulation.
Publisher
[Urbana, Ill.] : College of Commerce and Business Administration, Bureau of Economic and Business Research, University of Illinois at Urbana-Champaign,
Series/Report Name or Number
BEBR faculty working paper ; no. 872
Type of Resource
text
Language
eng
Permalink
http://hdl.handle.net/2142/26658
Has Version(s)
  • http://hdl.handle.net/10111/UIUCOCA:riskreturnrateba872bubn
  • http://www.archive.org/details/riskreturnrateba872bubn
Copyright and License Information
Copyright May 1982 Board of Trustees University of Illinois.

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