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The Great East Japan Earthquake’s Effects on Electric Power Companies’ Financial Situation

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Beyond its dramatic human and social consequences, the Fukushima disaster revealed the vulnerability of the Japanese electricity sector. This may have resulted in higher volatility in stock market prices, which has had an impact on asset management strategies. Another essential aspect to investigate is the impact on the financial situation of the firms. Indeed, if the deterioration in financial ratios is too large, the entire investment strategy in the sector can be questioned. We analyse 9 different financial ratios calculated for the 10 firms in the sector over the 2007–2016 period. Our results show that most ratios have severely been deteriorated by the shock, especially those reporting corporate returns, like ROE, ROA and net income /sales. Considering the risk level, we show that the catastrophe impacted the cash policy of the firms, with higher cash levels after 2011. Moreover, there is a long-term mean reverting process since in most cases it has happened more than 3 years after the earthquake. This means that the shock has had long run consequences for both corporate and market finance indicators, as well as for the risk-return equilibrium of the whole sector. Among the firms, it is no surprise that TEPCO suffered the most serious consequences for its financial situation.


  • Japan
  • Electric power industry
  • Risk
  • Return
  • Volatility
  • Earthquake

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  • DOI: 10.1007/978-3-030-00913-7_8
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Fig. 1

(Source Ministry of Trade, Economy and Industry (

Fig. 2

(Source Companies’ financial reports)

Fig. 3

(Source Companies’ financial reports and authors’ calculations)

Fig. 4

(Source Companies’ financial reports and authors’ calculations)


  1. 1.


  2. 2.

    Source Japan Electric Association (JEA) 日本電気協会 (Nihondenki kyōkai).

  3. 3.

    原子力 規制 委員会, Genshiryoku kisei iinkai.

  4. 4.

    原子力 安全 保安院, Genshiryoku anzen hoan-in.

  5. 5.

    Even if during the last three decades, major earthquakes have occurred in areas that had been denoted “less risky” (Stein et al. 2011).


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Nivoix, S., Rey, S. (2018). The Great East Japan Earthquake’s Effects on Electric Power Companies’ Financial Situation. In: Andreosso-O’Callaghan, B., Jaussaud, J., Zolin, M. (eds) Asian Nations and Multinationals. Palgrave Pivot, Cham.

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