Energy Security Risk and Firm Valuation: Does Political Connectivity Matter?

Employing panel regression models on a sample of U.S. energy firms, we document novel evidence suggesting that energy security risk significantly influences firms’ market valuation, albeit this effect is attributed largely to small- and medium-sized firms. It is also apparent that political connection mitigates the value erosion of firms with larger political capital. Our findings, therefore, validate the interceding role that political connectivity plays in corporate financial performance during periods of volatile energy markets.