BALANCING MULTIPLE INTERESTS IN REGULATION - AN EVENT STUDY OF THE ENGLISH AND WELSH WATER INDUSTRY

In this paper, an event study methodology is used to identify and anal yze the key regulatory initiatives taken by the economic regulator of the English and Welsh water industry during the period 1989-1994. An a nalysis of the movements of water company share returns relative to ag gregate stock market returns suggests that regulatory interventions di d affect investor expectations. The results are consistent with the hy pothesis that the regulator's actions balanced the often conflicting i nterests of the water industry's stakeholders, and that this balance r eflected the regulator's statutory duties.