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Cost Efficiency Estimations And The Equity Returns For The Us Public Solar Energy Firms In 1990–2008, Chris Kuo
Cost Efficiency Estimations And The Equity Returns For The Us Public Solar Energy Firms In 1990–2008, Chris Kuo
Faculty Publications and Presentations
This paper provides a direct estimate of the cost efficiencies of firms in the US solar energy industry. It suggests that the cost efficiency in the industry is associated with the risk-bearing behaviour of firms. Less efficient firms maintain low price-cost margins and high labour–capital ratios in order to compete with their efficient peers. The study then establishes the linkage between cost efficiency and stock returns. It shows that the change in cost efficiency, rather than cost efficiency itself, possesses a stronger explanatory power for stock returns. A buy-and-hold strategy for stock portfolios of different efficiency levels is then analysed. …