Main factors influencing the market valuation of alternative energy companies in Europe: the effect of announcement of green policies

In the beginning of this century, the world society faced a completely new challenge of ecological sustainability questioning and climate change which made a start on the emergence of renewable energies industry. From the investors’ point of view, it was interesting to have a look on this emerging market and try to understand its evolution and development patterns. In this way, the first objective of this work was, based on existing academic literature, to give an overview of factors that by the past had an influence on stock exchange price movements of companies active in renewable energy sector. Among the identified factors were oil price moves, technology indexes evolution, changing investment behaviours, growing awareness of energy consumers, legal interventions and other unpredictable causes as nuclear catastrophes. The second objective and the empirical core of this work consisted in seeing weather the announcement of a governmental intervention as a potential influencing factor had a significant impact on market prices of this industry. This study analyses the impact of 2016 Proposal for a directive to promote renewable energy sources on the European stock market of green energy companies. The study uses a sample of 26 companies to analyse 15 event dates with help of an event study methodology adapted to a regulatory change proposed by Lamdin (2001). The main findings are that no significant abnormal returns directly related to this regulatory change were observed.