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Impact of Bovine Spongiform Encephalopathy on Agribusiness in the United Kingdom: Results of an Event Study of Equity Prices

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  • Spencer Henson
  • Mario Mazzocchi

Abstract

This article assesses the impact on agribusinesses of the United Kingdom Government's announcement of a possible link between Bovine Spongiform Encephalopathy and human health. Three approaches are employed to derive benchmark models against which abnormal returns are estimated, a simple market model, Scholes-Williams approach, and an autoregressive distributed lag model. Abnormal returns are estimated for single firms and for subsectors over an eight-day event window. The autoregressive distributed lag model performs best and indicates significant negative abnormal returns in the beef, pet food, animal feed, and dairy sectors and positive abnormal returns in the other meats sector. Copyright 2002, Oxford University Press.

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Bibliographic Info

Article provided by Agricultural and Applied Economics Association in its journal American Journal of Agricultural Economics.

Volume (Year): 84 (2002)
Issue (Month): 2 ()
Pages: 370-386

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Handle: RePEc:oup:ajagec:v:84:y:2002:i:2:p:370-386

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Cited by:
  1. Carter, Colin A. & Smith, Aaron D., 2004. "The Market Effect of a Food Scare: The Case of Genetically Modified StarLink Corn," Working Papers 11997, University of California, Davis, Department of Agricultural and Resource Economics.
  2. Moonsoo Park & Yanhong H. Jin & David A. Bessler, 2008. "The impacts of animal disease crises on the Korean meat market," Agricultural Economics, International Association of Agricultural Economists, vol. 39(2), pages 183-195, 09.
  3. Pozo, Veronica F. & Schroeder, Ted C., 2013. "Effects of Meat Recalls on Firms' Stock Prices," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 151287, Agricultural and Applied Economics Association.
  4. Elbakidze, Levan & McCarl, Bruce A., 2005. "Ex Ante Vs. Ex Post Bioterrorism Mitigation: Better Safe Than Sorry?," 2005 Annual meeting, July 24-27, Providence, RI 19191, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  5. Lloyd, Tim A. & Morgan, C. Wyn & McCorriston, Steve & Rayner, Anthony J., 2003. "The Impact Of Food Scares On Price Transmission In Inter-Related Markets," 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa 25904, International Association of Agricultural Economists.
  6. Wilson, Christine A. & Featherstone, Allen M., 2002. "The Effects Of Food Safety Issues On Diversifiable And Nondiversifiable Agribusiness Risk," 2002 Annual meeting, July 28-31, Long Beach, CA 19678, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  7. Wilson, John S. & Otsuki, Tsunehiro & Majumdar, Baishali, 2003. "Balancing Food Safety And Risk: Do Drug Residue Limits Affect International Trade In Beef?," 2003 Annual meeting, July 27-30, Montreal, Canada 21971, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  8. Colin A. Carter & Aaron Smith, 2007. "Estimating the Market Effect of a Food Scare: The Case of Genetically Modified StarLink Corn," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 522-533, August.
  9. Alessandro Corsi & Silvia Novelli, 2011. "Willingness-to-pay in terms of price: an application to organic beef during and after the “mad cow” crisis," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 92(1), pages 25-46.
  10. Jin, Hyun Joung, 2008. "Changes in South Korean consumers' preferences for meat," Food Policy, Elsevier, vol. 33(1), pages 74-84, February.
  11. Kola, Jukka & Latvala, Terhi, 2002. "Demand For Credence Characteristics In Beef," 2002 Annual meeting, July 28-31, Long Beach, CA 19703, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  12. Zhen, Chen & Wohlgenant, Michael K., 2006. "Food Safety and Habits in U.S. Meat Demand under Rational Expectations," 2006 Annual meeting, July 23-26, Long Beach, CA 21287, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  13. Pritchett, James G. & Thilmany, Dawn D. & Johnson, Kamina K., 2005. "Animal Disease Economic Impacts: A Survey of Literature and Typology of Research Approaches," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IAMA), vol. 8(01).
  14. Elbakidze, Levan, 2007. "Economic Benefits Of Animal Tracing In The Cattle Production Sector," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon 9510, Western Agricultural Economics Association.
  15. Moghadam, Arian Khaleghi & Schmidt, Claudia & Grier, Kevin, 2013. "The impact of E. Coli O157:H7 recalls on live cattle futures prices: Revisited," Food Policy, Elsevier, vol. 42(C), pages 81-87.
  16. Henson, Spencer J. & Hooker, Neal H., 2001. "Private Sector Management Of Food Safety: Public Regulation And The Role Of Private Controls," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IAMA), vol. 4(01).
  17. Hsieh, Hui-Yuan & Forster, John, 2007. "Market External Events as Triggers of the 1991-1997 Residential Construction Peak in Taiwan," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, vol. 37(1), pages 15-40, March.
  18. Kalogeras, Nikos & Pennings, Joost M.E. & van Ittersum, Koert, 2008. "Consumer Food Safety Risk Attitudes and Perceptions Over Time: The Case of BSE Crisis," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44156, European Association of Agricultural Economists.
  19. Elbakidze, Levan & McCarl, Bruce A., 2006. "Animal Disease Pre-Event Preparedness versus Post-Event Response: When is it Economic to Protect?," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 38(02), August.
  20. Nilsson, Tomas K.H. & Foster, Kenneth A., 2005. "Certification of Pork Products," 2005 Annual meeting, July 24-27, Providence, RI 19350, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  21. Jin, Hyun Joung & Sun, Changyou & Koo, Won W., 2003. "The Effect Of Food-Safety Related Information On Consumer Preference: The Case Of The Bse Outbreak In Japan," Agribusiness & Applied Economics Report 23636, North Dakota State University, Department of Agribusiness and Applied Economics.

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