Determinants of Capital Allocation Strategies for Energy Infrastructure Investments Based on Empirical Evidence

Md Shahdat  Hossain; Rifah Tasnia

doi:10.51699/cajotas.v7i4.1740

Authors

Md Shahdat Hossain Department of Electrical Engineering, University of New Haven, Connecticut- CT 06516 United States
Rifah Tasnia Master of Business Administration, Pennsylvania State University, University Park, PA 16802, USA

DOI:

https://doi.org/10.51699/cajotas.v7i4.1740

Keywords:

Capital allocation strategy, Energy infrastructure investment, Financial performance, Investment risk assessment, Regulatory support

Abstract

Background: Investing in energy infrastructure needs lots of money and careful decisions for future success in both economic and functional terms. In line with that, it is crucial for companies to utilize the allocated funds wisely by considering different aspects related to finance, risks of investment, regulations, and others. Methods: The study was conducted employing the quantitative research design and using the primary data received from 175 people who work in the field of energy infrastructure within the USA. Data were obtained with the help of an online survey on a five-point Likert scale. Descriptive statistics, Pearson correlation analysis, and multiple linear regression were carried out by means of IBM SPSS Statistics Version 29 software.Result: It is found that investments in renewable energy projects have got the topmost investment priority (27%), whereas grid modernization has got the second (20%). Pearson correlation results reveal significant and positive relationships among all the variables under study. Capital Allocation Strategy shows significant association with Infrastructure Investment Performance (r = 0.731). Regression model has been able to explain 67.2% of the variation in investment performance (R² = 0.672). Capital Allocation Strategy (β = 0.334) shows itself to be the best predictor followed by Financial Performance (β = 0.281), Investment Risk Assessment (β = 0.194), and Regulatory Support (β = 0.147). Conclusion: This study concludes that proper capital allocation strategy combined with good financial performance and investment risk assessment can lead to better infrastructure investment performance.

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