The purpose of this research was to determine if there is empirical evidence to show that an association exists between the energy usage of manufacturing industries and companies and their risk. This possibility was considered important because of the attention that has been focused on energy problems since the OPEC oil embargo and the interest of investors in the risk of securities. Support for the possibility that an association may exist was based on reviewing the energy problem, public opinion polls, writings by economists and business executives, and the stock market's reaction to the embargo. A review of the recent work of accountants in the areas of energy audits and social accounting was also presented to place this research in perspective with other studies.

Various hypotheses were tested using Kendall's Tau Rank Correlation test to see if an association exists between the energy usage of U. S. manufacturing industries and companies and their risk and changes in their risk since the OPEC embargo. Each hypothesis was tested using two different definitions of energy usage and two measures of risk. The definitions consisted of one where energy usage was stated as the total consumption of Btu’s or kwh’s by companies and industries. The second definition was based on energy consumption per dollar of sales or receipts. The risk was measured using the variability in the returns to the common stockholders. Both a measure of the total risk and a measure of the systematic risk were used for the statistical tests.

The results of the tests of the hypotheses are difficult to interpret since the correlations are not all in the same direction and most of them are not statistically different from zero at a reasonable level of significance. Only the association between the total energy usage of manufacturing industries and their total risk, and the association between the total energy usage of manufacturing companies and the change in their systematic risk since the OPEC embargo were significant at the .10 level. However, both of these correlations were negative as were the correlations for many of the other hypotheses. None of the correlation coefficients with a positive sign were significant at the .10 level. Based on these results, it was concluded that negative association between energy usage and risk was more likely to exist than positive association.

A possible explanation for the negative correlation was then presented. This explanation was based on the characteristics of the assets of the firm and the price elasticity of the demand for a company's product. No empirical data were presented, however, to support this explanation. The limitations of the study and areas for future research were also discussed.