AF4912 Capstone Project

The stock market reaction of the Fukushim

a nuclear accident on energy stocks
Group 112
Members:
Lee Yin Hei, Otto
12119046D
Hung Chun Hing, Harry
12121553D

Fukushima Daiichi nuclear disaste

r
A highest level of nuclear accident

Fukushima Daiichi nuclear disaste

r
A highest level of nuclear accident

Europe
25% electricity generated by nuclear
power in 2015

Chernobyl nuclear disaster

Chernobyl nuclear disaster

Nuclear Power in the Europe

Country or area

Nuclear electricity
production (TWh)

Nuclear share (%)

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2013

2014

Armenia

38.8

42.7

42

43.5

39.4

45

39.4

33.2

26.6

29.2

30.7

2.2

2.3

Belgium

55.1

55.6

54.4

54.1

53.8

51.7

51.1

54

51

52.1

47.5

40.6

32.1

Bulgaria

41.6

44.6

43.6

32.1

32.9

35.9

33.1

32.6

31.6

30.7

31.8

13.3

15

Czech Rep

31.2

30.5

31.5

30.3

32.5

33.8

33.3

33

35.3

35.9

35.8

29

28.6

Finland

26.6

32.9

28

28.9

29.7

32.9

28.4

31.6

32.6

33.3

34.6

22.7

22.6

France

78.1

78.5

78.1

76.9

76.2

75.2

74.1

77.7

74.8

73.3

76.9

405.9

418

Germany

32.1

31

31.8

25.9

28.3

26.1

28.4

17.8

16.1

15.5

15.8

92.1

91.8

Hungary

33.8

37.2

37.7

36.8

37.2

43

42.1

43.2

45.9

50.7

53.6

14.5

14.8

Lithuania

72.1

69.6

72.3

64.4

72.9

76.2

3.8

3.9

3.5

4.1

3.8

3.7

3.4

3.6

4.4

2.8

2.7

Romania

10.1

8.6

13

17.5

20.6

19.5

19

19.4

19.8

18.5

10.7

10.8

Russia

15.6

15.8

15.9

16

16.9

17.8

17.1

17.6

17.8

17.5

18.6

161.7

169.1

Slovakia

55.2

56.1

57.2

54.3

56.4

53.5

51.8

54

53.8

51.7

56.8

14.6

14.4

Slovenia

38.8

42.4

40.3

41.6

41.7

37.9

37.3

41.7

36

33.6

37.2

Spain

22.9

19.6

19.8

17.4

18.3

17.5

20.1

19.5

20.5

19.7

20.4

54.3

54.9

Sweden

51.8

46.7

48

46.1

42

34.7

38.1

39.6

38.1

42.7

41.5

63.7

62.3

40

32.1

37.4

40

39.2

39.5

38

40.8

35.9

36.4

37.9

25

26.5

19.4

19.9

18.4

15.1

13.5

17.9

15.7

17.8

18.1

18.3

17.2

64.1

57.9

Netherlands

Switzerland
UK

Hypothesis development
H1. The Fukushima accident and subsequent events neg
atively affected stock prices on nuclear energy companie
s.
H2. The Fukushima accident and subsequent events pos
itively affected stock prices on alternative energy compa
nies.
H3. Different nuclear policy inclinations from European
political regimes led to the variation on stock prices in t
he markets.

Research method
Data

Sample Companies
Nuclear company
Conventional utilities
Alternative utilities
Electricity
Alternative electricity
Alternative energy
Alternative fuels
Renewable energy equipment and provider
Total

9
9

31
2
16
67

Research method
Methodology

T=-250

T=0
T=-1

T=25
T=5

(Brunnermeier, 2003)

Research method
Methodology

T=-250

T=0
T=-1

T=25
T=5

(Brunnermeier, 2003)

Research method
Methodology

T=-250

T=0
T=-1

T=25
T=5

(Brunnermeier, 2003)

Paired t-test
Alternative energy companies
5% significance level

Firm risk (i) during the

time interval

-250 to -1

+1 to
+250

Mean

0.146267

0.161647

Variance

0.022671

0.021668

49

49

Observations
Pearson Correlation
df

0.869067
48

t Stat

-1.411555

P(T<=t) two-tail

0.164531

t Critical two-tail

2.010635

Paired t-test
Nuclear companies
5% significance level

Firm risk (i) during the

time interval

-250 to -1

+1 to
+250

Mean

0.623456

0.574506

Variance

0.102056

0.109503

Observations
Pearson Correlation
df
t Stat

0.815139
8
0.741554

P(T<=t) two-tail

0.479558

t Critical two-tail

2.306004

Paired t-test
Conventional companies
5% significance level

Firm risk (i) during the

time interval

-250 to -1

+1 to
+250

Mean

0.406267

0.414244

Variance

0.126419

0.087853

Observations
Pearson Correlation
df

0.859376
8

t Stat

-0.131472

P(T<=t) two-tail

0.898648

t Critical two-tail

2.306004

Empirical Result- Europe

European Nuclear companies
0
25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10

0
-0.01
-0.02
-0.02
-0.03

1.77%

2.17%

-0.03
-0.04
-0.04

1.38%

Timeline for Fukushima nuclear

accident
Magnitu
de 9
earthqua
ke took
place in
March
Japan
11

unit 3
reactor
building
exploded

Severe level
of radiation
leakage(1
Sv/h)

Marc
h
evacuation
12
zone around

Fukushima I is
extended to 20
km
Marc
h
Fukushima I
13

March
18

Marc
h 16

March
14

Day

High radiation
levels are detected
in an area 30 km
northwest of the
nuclear plant

Marc
h
15

second
explosion of
reactor 3

Unit I is
classified as an
INES(Internation
al Nuclear Event
Scale) Level-4
accident

Marc
h 17

25

No more
explosion
and nuclear
reactor start
under control

Severe level
of radiation
leakage(3.75
Sv/h)

OCED Nuclear Energy Agency

(2012)

Empirical Result- Europe

European Nuclear companies
0
5
0
-0.01
-0.02
-0.02
-0.03
-0.03
-0.04
-0.04

Empirical Result- Europe

European Nuclear companies

0.01

0
25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10

-0.01

-0.01

-0.02

-0.02

Empirical Result- Europe

European Nuclear companies

0.01

0
5

-0.01

-0.01

-0.02

-0.02

1.82%
0

Empirical Result- Europe

European alternative energy companies
0.07
0.06
0.05

3.63%

0.04

5.18%

0.03
0.02
0.01
0
-0.01
-0.02
-0.03

2.1%
25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10

Empirical Result- Europe

0.08

European alternative energy companies

0.06

0.04

0.02

0
25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10
-0.02

-0.04

Empirical Result- Europe

European alternative energy companies

0.08

0.06

8.3%

0.04

0.02

0
5
-0.02

-0.04

Empirical Result- Europe

European conventional companies
0.06

0.05

0.04

0.03

0.02

0.01

0
25

24

23

22

21

20

19

18

17

16

15

14

13

12

11

10

Empirical Result- Europe

European conventional companies

0.05
0.05
0.04
0.04
0.03
0.03
0.02
0.02
0.01
0.01
0
25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10

Empirical Result- Europe

European conventional companies

0.04

0.03

2.71%

0.03

0.02

0.02

0.01

0.01

0
5

Among Countries
Continue with nuclear energy
12 member states, including Finland and France
Phase-out nuclear power stations
Belgium and Germany
Day 0 to Day1

Day 1 to Day 5

Immediate impacts
after Fukushima
Nuclear accident

Impacts after how the

governments reacted
and the markets
expected

Day 0 to day 1
Day 1 to Day 5

Nuclea Conventio Alternati Nucle Conventio Alternativ

r
nal
ve
ar
nal
e
Europea
0.85%
2.10%
0.96%
3.63%
n
2.17%
1.38%
average
Belgium
/
/
2.70%
/
/
0.39%
Denmar
/
/
3.98%
/
/
3.22%
k
Finland
/
/
4.78%
/
/
0.94%
France
-4.6%
/
1.52% -4.5%
/
6.36%
German
-3.3%
4.42%
-3.29%
4.10%
y
2.94%
1.85%
Greece
/
7.36%
3.76%
/
-3.19%
-0.63%
Italy
-0.90%
0.37% 3.10%
0.60%
5.41%
1.36%
Spain
2.54%
1.32%
-0.38%
8.73%
1.07%
1.06%
Switzerl
/
/
1.50%
/
/
0.05%
and
Russia
/
/
/
/

Finland
Finnish nuclear companies
0.04
0.03
0.02
0.01
0
5
-0.01
-0.02
-0.03

4.78%

France

France
French nuclear companies
French alternative energy companies
0
-0.02

-0.04

0.08
0.06
0.04

-0.06

0.02

-0.08
-0.1

-0.12

-0.02

4.5%

6.36%

Possible reason
Expectation of Investor

Under-developed renewable energy sector

Investors may worry about the extremely high usage of nuclear

energy
Looking forward to additional developments on renewable energy

Germany
Anti nuclear protest

Germany
German alternative energy companies

German nuclear companies

0.02

0.08

0.01

0.06

0
-0.01

0.04
0.02

-0.02

-0.03
-0.04

-0.02

-0.05

-0.04

1.85%

4.1%

Main reasons on Germans d

ecisions
Wittneben (2012) from University of Oxford
1. Regional elections
2. Intensive reporting
3. Leader in renewable
energy
4. History of nuclear
resistance
5. Cultural proximately
to Japan

Russia
Russian nuclear companies
0
-0.02

8.15%

-0.04
-0.06
-0.08
-0.1
-0.12

Using first-generation reactors similar to those in

Chernobyl nuclear accident
The closest country among the observed countries

Conclusion on results
Nuclear vs Alternative energy & Conventional
Advocating vs Opposing on nuclear energy
Expectation on types of energy and information on nuclear ene
rgy

Five years later

Nuclear accident

Risk vs Lives

It is not only a risk about a company or a

country, it is a risk for all the human life.

Reference List
Betzer, A., Doumet, M. & Rinne, U. (2011). How Policy Changes Affect Shareholder Wealth: The Case of the Fukushima Daiichi Nuclear Disaster. In Schumpeter Discussion Paper Series 2011011. Retrieved November 6, 2
015 from http://elpub.bib.uni-wuppertal.de/servlets/DerivateServlet/Derivate-1932/sdp11011.pdf
Bluenomics (2014). Electricity production by sources for France. Retrieved February 4, 2016 from https://www.bluenomics.com/data#!data/country_overview/energy_3/electricity_production_by_sources/electricity_produ
ction_by_sources_annual_of_total|chart/line&countries=france
Bluenomics (2014). Electricity production by sources for Germany. Retrieved February 4, 2016 from https://www.bluenomics.com/data#!data/country_overview/energy_3/electricity_production_by_sources/electricity_pro
duction_by_sources_annual_of_total|chart/line&countries=germany
Bluenomics (2014). Electricity production by sources for Spain. Retrieved February 4, 2016 from https://www.bluenomics.com/data#!data/country_overview/energy_3/electricity_production_by_sources/electricity_produc
tion_by_sources_annual_of_total|chart/line&countries=spain
Brunnermeier, M. K. (2003). Value Relevance of Analysts Earnings Forecasts . Retrieved November 10, 2015 from https://www.princeton.edu/~markus/teaching/Eco467/04Lecture/04Event%20Study%20Description.pdf
Edf (2012). EdF Annual Report. Retrieved February 2, 2016 from https://www.edf.fr/en/the-edf-group/dedicated-sections/finance/financial-information/publications/annual-report
Enel- (2014). Enel Annual Report 2011. Retrieved February 8, 2016 from https://www.enel.com/en-gb/Documents/FinancialReports/report2011/Enel_Annual_Report_2011.pdf
Ferstl, R., Utz, S. & Wimmer, M. (2012). The Effect of the Japan 2011 Disaster on Nuclear and Alternative Energy Stocks Worldwide: An Event Study. Journal of Business Research, 5 (1), 25-41.
Lopatta, K. & Kaspereit, T. (2012). The Cross-Section of Returns, Benchmark Model Parameters, and Idiosyncratic Volatility of Nuclear Energy Firms after Fukushima Daiichi . Energy Economics, 41 .
Inter Rao (2016). Inter RAO UES files Annual RAS Reports for 2010. Retrieved February 2, 2016 from http://interrao.ru/en/news/company/?ELEMENT_ID=438
Joint Research Centre (2016). Post-Fukushima Policy. Retrieved from http://ehron.jrc.ec.europa.eu/post-fukushima-policy
Marcovici, M. (2013). Lesson Learned?: Nuclear Energy after Fukushima
Mowery, B. D. (2011). The paired t-test. Pediatric Nursing, 37 (6), 320-321.
Negishi, M. & Pfanner, E. (2016, March 9). Fukushima Still Rattles Japan, Five Years After Nuclear Disaster. The Wall Street Journal
Nuclear and Industrial Safety Agency (2011). News Release. Retrieved February 1, 2016 from http://www.webcitation.org/69MikbzsO
OCED Nuclear Energy Agency (2012). Timeline for the Fukushima Daiichi nuclear power plant accident. Retrieved from https://www.oecd-nea.org/news/2011/NEWS-04.html
Shingo, K. & Fumiko, T. (2012). The effect of the Fukushima nuclear accident on stock prices of electric power utilities in Japan. Energy Economics, 34 2029-2038.
Statistics Help for Students (2008). How do I interpret data in SPSS for a paired samples T-test?. Retrieved January 15, 2016 from http://statistics-help-for-students.com/How_do_I_interpret_data_in_SPSS_for_a_paired_sa
mples_T_test.htm#.VsMn2Pl97IW
Wittneben, B. F. (2012). The Impact of the Fukushima Nuclear Accident on European Energy Policy. Environmental Science & Policy, 15 1-3.
World Nuclear Association (2014). World Nuclear Power Reactors. Retrieved February 4, 2016 from http://www.world-nuclear.org/information-library/facts-and-figures/world-nuclear-power-reactors-and-uranium-requir
eme.aspx
World Nuclear Association (2015). Nuclear Power in the European Union. Retrieved November 6, 2015 from http://www.world-nuclear.org/info/Country-Profiles/Others/European-Union/
World Nuclear Association (2015). Nuclear shares of electricity generation - World Nuclear Association. Retrieved January 16, 2016 from http://www.world-nuclear.org/information-library/facts-and-figures/nuclear-gener
ation-by-country.aspx
Xinhua (2011), Russia's Nuclear Energy Policy Unchanged after Fukushima Accident . Retrieved February 3, 2016 from http://www.aec.gov.tw/webpage/info/files/energy_news_02-13_1.pdf

~Thank you~