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Title:European telecommunication regulation: Effects on telecommunication providers PDF Logo
Authors:Veith, Tobias
Issue Date:2010
Series/Report no.:ZEW Discussion Papers 10-088
Abstract:This paper considers the impact of European telecom regulation on the value of affected companies. Employing a repeating ARGARCH model, I compare the effect of three types of regulation which are categorized based on the addressed subject, i.e. cross-market, country-specific and company-specific regulation. While standard event study approaches are a special case of ARGARCH models, the approximation process chosen in this paper shows a better estimation of the stock price development based on autoregressive models and, thus, more robust estimation results for the reaction to a regulatory change. Turning to the economic results, I find positive reactions to crossmarket and country-specific regulation and negative reactions to regulation which directly addresses individual firms. The impact on volatility supports the findings of the returns analysis. These findings show that European Commission interventions are competition enhancing and support the expected performance of the affected companies in the telecommunications sector. However, while country-addressing interventions and company-addressing interventions follow similar aims, country-addressing interventions cause more uncertainty to a market because of the national process of governments' adjustments. Thus, the estimation results provide evidence that companies prefer direct European regulation over the implementation by national governments, independent of providers' incumbency.
Subjects:regulation
telecommunications
company value
JEL:L51
L52
L86
L96
O31
O33
Document Type:Working Paper
Appears in Collections:ZEW Discussion Papers
Publikationen von Forscherinnen und Forschern des ZEW

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