Regulation and the financial performance of Canadian agribusinesses
AbstractPurpose – The purpose of this paper is to investigate the relationships between regulatory changes, returns on equity and stock market valuations for Canadian food and non-food agribusinesses. Design/methodology/approach – Two empirical approaches are employed. First, an event study is used to evaluate the impact of official regulatory announcements on the stock market valuations of selected Canadian agribusinesses. Next, an approach introduced by Mishra et al. using the Du Pont expansion is applied to investigate the effect of regulations on firms' accounting profits. Data on Canadian food and non-food agribusinesses are collected from Bloomberg, Thompson One Banker and SEDAR. Findings – The event study demonstrates that official regulatory announcement dates do not correspond with abnormal stock market returns for Canadian firms, while the Du Pont model yields mixed evidence with respect to their accounting profits. Research limitations/implications – This paper only considers publicly traded companies. As a result, survivorship bias may exist. Future research should include privately held and cooperative firms. Social implications – Food regulations can influence firm profits and shareholder wealth, so understanding how government actions influence agribusiness is important when considering the total costs of current and future food policy. Originality/value – The interaction between policy and the financial performance of Canada's publicly traded agribusinesses is an under-researched area and no studies have examined Canadian data. The results of this study are valuable to both policy makers and researchers.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Emerald Group Publishing in its journal Agricultural Finance Review.
Volume (Year): 71 (2011)
Issue (Month): 2 (July)
Contact details of provider:
Web page: http://www.emeraldinsight.com
Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Michael R. Thomsen & Andrew M. McKenzie, 2001. "Market Incentives for Safe Foods: An Examination of Shareholder Losses from Meat and Poultry Recalls," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(3), pages 526-538.
- Armitage, Seth, 1995. " Event Study Methods and Evidence on Their Performance," Journal of Economic Surveys, Wiley Blackwell, vol. 9(1), pages 25-52, March.
- Gunderson, Michael A. & Moss, Charles B., 2007. "Using APT to Assess the Impact of Farm Policy on Agribusiness Stocks," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 9775, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Detre, Joshua D. & Gunderson, Michael A. & Briggeman, Brian C., 2008. "Identifying Abnormal Returns to Food and Agribusiness Stocks on Key Farm Policy Legislative Dates," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 26(1).
- Zijun Wang & Victoria Salin & Neal Hooker & David Leatham, 2002. "Stock market reaction to food recalls: a GARCH application," Applied Economics Letters, Taylor and Francis Journals, vol. 9(15), pages 979-987.
- Fatma Sine Tepe & Xiaodong Du & David A. Hennessy, 2011.
"The impact of biofuels policy on agribusiness stock prices,"
John Wiley & Sons, Ltd., vol. 27(2), pages 179-192, Spring.
- Tepe, Fatma & Du, Xiaodong & Hennessy, David A., 2011. "The Impact of Biofuels Policy on Agribusiness Stock Prices," Staff General Research Papers 32530, Iowa State University, Department of Economics.
- Tepe, Fatma Sine & Du, Xiaodong & Hennessy, David A., 2010. "The Impact of Biofuels Policy on Agribusiness Stock Prices," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 60987, Agricultural and Applied Economics Association.
- Manfredo, Mark R. & Sanders, Dwight R. & Scott, Winifred, 2008. "Quarterly Earnings Estimates for Publicly Traded Agribusinesses: An Evaluation," 2008 Annual Meeting, June 23-24, 2008, Big Sky, Montana 42436, Western Agricultural Economics Association.
- Mario Mazzocchi & Maddalena Ragona & Melanie Fritz, 2009. "Stock market response to food safety regulations," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 36(4), pages 571-595, December.
- Moss, Charles B. & Mishra, Ashok K. & Dedah, Cheikhna O., 2009. "Decomposing Agricultural Profitability Using DuPont Expansion and Theil’s Information Approach," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49524, Agricultural and Applied Economics Association.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Harris).
If references are entirely missing, you can add them using this form.