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Stock market reaction to irregular supermarket chain behaviour: An investigation in the retail sectors of Ireland and the United Kingdom

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  • Corbet, Shaen
  • McMullan, Caroline

Abstract

The creation of a single European currency, financial crises, changing consumer tastes and the entry of a significant number of new competitors has created an extremely competitive retail environment in Ireland and the United Kingdom. To defend market share, some retail companies have resorted to a variety of questionable, unethical and illicit techniques. This paper examines the reaction of investors to such incidents involving publicly traded companies. An ARMAX-GARCH(1,1) model is utilised to present evidence that increased market volatility is associated with detrimental internal behaviour and financial malpractice which may reassure regulators that these actions are not considered by investors as an acceptable manner in which to operate a company. Further, investors often do not consider a single company to be at fault, but rather punish the entire retail sector for diminished responsibility due to substandard quality assurance.

Suggested Citation

  • Corbet, Shaen & McMullan, Caroline, 2018. "Stock market reaction to irregular supermarket chain behaviour: An investigation in the retail sectors of Ireland and the United Kingdom," Journal of Retailing and Consumer Services, Elsevier, vol. 43(C), pages 20-29.
    • Handle: RePEc:eee:joreco:v:43:y:2018:i:c:p:20-29
    DOI: 10.1016/j.jretconser.2018.02.011
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    Cited by:

    1. Shaikh, Aijaz A. & Karjaluoto, Heikki & Häkkinen, Juho, 2018. "Understanding moderating effects in increasing share-of-wallet and word-of-mouth: A case study of Lidl grocery retailer," Journal of Retailing and Consumer Services, Elsevier, vol. 44(C), pages 45-53.
    2. Patel, Pankaj C. & Struckell, Elisabeth M. & Ojha, Divesh, 2020. "Calorie labeling law and fast food chain performance: The value of capital responsiveness under sales volatility," Journal of Business Research, Elsevier, vol. 117(C), pages 346-356.

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    More about this item

    Keywords

    Stock market volatility; Supermarkets; Behavioural intentions; ARMAX-GARCH;
    All these keywords.

    JEL classification:

    • C4 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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