Effects of the debate on glyphosate's carcinogenic risk on pesticide producers' share prices

We analyze the impact of the glyphosate controversy in the European Union in the period 2015–2017 on share prices of pesticides producing companies. Following an event study approach, we use daily stock market data for nine pesticide producers to identify the impact of eight regulatory events on companies' stock returns from 2015 until 2017. More specifically, we examine whether and how i) public announcements of assessments of glyphosate's risk to human health, and ii) decisions by regulatory bodies with respect to glyphosate's approval extension have affected the share prices of publicly traded pesticide producers. We use share prices reflecting the firms' market value and consequently expected future profitability and firm performance. We find that, on average, pesticide producers' share prices have been affected weakly by the glyphosate controversy in the EU. However, the first assessment of glyphosate's risk to human health on 20th of March 2015 has a clear negative effect. Our results show considerable heterogeneity regarding the impact on the firm-level. For example, firms that are more focused on glyphosate sales tend to be affected more strongly. Our analysis provides first insights in pesticide industry implications of discussions on pesticide bans. We draw policy conclusions and derive firm-strategic recommendations.