Stock market reaction to food recalls: a GARCH application

Wang, Zijun; Salin, Victoria; Hooker, Neal H.; Leatham, David J.

doi:10.1080/13504850210148125

Cited by 39 publications

(22 citation statements)

References 27 publications

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“…For large firms, while the financial penalties in terms of fines associated with non-compliance may be trivial, the costs of bad publicity and/or product recalls can act as powerful market incentives for compliance. These can take the form of both the immediate costs of product withdrawal and disposal and, more significantly, the longerterm loss of market share (Salin and Hooker, 2001;Wang et al, 2002). For smaller firms, the financial penalties associated with regulatory action alone can impose significant economic costs and provide sufficient deterrence to non-compliance.…”

Section: Enforcementmentioning

confidence: 99%

Co-regulation as a possible model for food safety governance: Opportunities for public–private partnerships

et al. 2007

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Public concern about food safety is placing increasing pressure on government agencies to be more prescriptive and proactive in their regulation of the food industry. However, given the scarcity of public sector resources, concerns about the impact of regulation on competitiveness and the scale of the task at hand, there is growing interest in co-regulation, with public and private sectors working hand-in-hand to deliver safer food at lower (regulatory) cost. This paper explores the scope for the co-regulation of food safety in the UK and North America, where there are distinct differences in the established regulatory processes. The authors conclude that opportunities clearly exist, to varying degrees in the different countries analysed, but that considerable obstacles remain to the widespread adoption of co-regulatory practices in the area of food safety.

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Section: Enforcementmentioning

confidence: 99%

Co-regulation as a possible model for food safety governance: Opportunities for public–private partnerships

et al. 2007

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“…In Table 6 the model is reestimated by adding a dummy which tests the change in conditional volatility after the burst of the Nasdaq stock market bubble in March 2000. The approach used for evaluating the impact of changes in stock price volatility after news' releases or regime shifts follows previous research from Choi and Kim (2002), Crain and Lee (1996), Becchetti and Caggese (2000) and Wang et al (2002). …”

Section: Domini Affiliation and Conditional Stock Return Volatilitymentioning

confidence: 99%

Corporate social responsibility and corporate performance: evidence from a panel of US listed companies

2008

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We investigate whether inclusion and permanence in the Domini social index affects corporate performance on a sample of around 1,000 firms in a 13-year interval by controlling for size, industry, business cycle and time invariant firm idiosyncratic characteristics. Our results find partial support to the hypothesis that corporate social responsibility is a move from the shareholders wealth to a multistakeholders welfare target. On the one side, permanence into the Domini index is shown to increase (reduce) significantly total sales per employee (returns on equity but not when large and R&D investing firms are excluded from the sample). On the other side, lower returns on equity for Domini firms seem nonetheless to be accompanied by relatively lower conditional volatility and lower reaction to extreme shocks with respect to the control sample. An explanation for these findings, suggested by the inspection of Domini criteria, is that social responsibility implies, on the one side, decisions leading to higher cost of labour and of intermediate output, but may, on the other side, enhance involvement, motivation and identification of the workforce with company goals with positive effects on productivity.Key words: social responsibility, stakeholders, corporate performance.

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“…Detailed empirical research has found that product recalls can have a significant negative impact on firms across a range of performance measures, including operational performance (Hendricks & Singhal, 2005), share price Salin & Hooker, 2001;Wang et al, 2002), customer sales (Thomsen et al, 2006), consumer demand (Marsh et al, 2004), market movements (Palma et al, 2010), food prices (Li et al, 2010;, and prices on the futures market (Lusk & Schroeder, 2002). For example, Thomsen et al (2006) found that sales of recalled brands declined, on average, by 22% to 27% during the four to eight week time period after a recall announcement of Listeria.…”

Section: Introductionmentioning

confidence: 99%

Trends in product recalls within the agri-food industry: Empirical evidence from the USA, UK and the Republic of Ireland

Potter

Murray

Lawson

et al. 2012

Trends in Food Science & Technology

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Please cite this article as: Potter, A., Murray, J., Lawson, B., Graham, S., Trends in product recalls within the agri-food industry: Empirical evidence from the USA, UK and the Republic of Ireland, Trends in Food Science & Technology (2012), doi: 10.1016/j.tifs.2012 This is a PDF file of an unedited manuscript that has been accepted for publication. As a service to our customers we are providing this early version of the manuscript. The manuscript will undergo copyediting, typesetting, and review of the resulting proof before it is published in its final form. Please note that during the production process errors may be discovered which could affect the content, and all legal disclaimers that apply to the journal pertain. M A N U S C R I P T A C C E P T E D ACCEPTED MANUSCRIPT Trends in Product Recalls within the Agri-Food Industry: Empirical Evidence from the USA, UK and the Republic of Ireland AbstractThe increasing frequency of product recalls within the agri-food industry has led many to question food safety. Research studies also often focus on biological hazards without considering how past, present and emerging risks change over time. We undertake a systematic review of the different biological, operational and chemical hazards within the agri-food industry using a dataset of 2,070 registered food recalls in the USA, UK and Republic of Ireland between 2004-2010. We show product recalls have become more frequent over time and operational hazards, rather than biological and chemical hazards, are the most frequent recall type within the agrifood industry.

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Stock market reaction to food recalls: a GARCH application

Cited by 39 publications

References 27 publications

Co-regulation as a possible model for food safety governance: Opportunities for public–private partnerships

Co-regulation as a possible model for food safety governance: Opportunities for public–private partnerships

Corporate social responsibility and corporate performance: evidence from a panel of US listed companies

Trends in product recalls within the agri-food industry: Empirical evidence from the USA, UK and the Republic of Ireland

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