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Regulation and the financial performance of Canadian agribusinesses


  • Brandon Schaufele
  • David Sparling


Purpose - 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 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.

Suggested Citation

  • Brandon Schaufele & David Sparling, 2011. "Regulation and the financial performance of Canadian agribusinesses," Agricultural Finance Review, Emerald Group Publishing, vol. 71(2), pages 201-217, August.
  • Handle: RePEc:eme:afrpps:v:71:y:2011:i:2:p:201-217

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    References listed on IDEAS

    1. Calum G. Turvey & Linda Lake & Erna van Duren & David Sparling, 2000. "The relationship between economic value added and the stock market performance of agribusiness firms," Agribusiness, John Wiley & Sons, Ltd., vol. 16(4), pages 399-416.
    2. 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. 0(Number 1), pages 1-19.
    3. Fatma Sine Tepe & Xiaodong Du & David A. Hennessy, 2011. "The impact of biofuels policy on agribusiness stock prices," Agribusiness, John Wiley & Sons, Ltd., vol. 27(2), pages 179-192, Spring.
    4. Zijun Wang & Victoria Salin & Neal Hooker & David Leatham, 2002. "Stock market reaction to food recalls: a GARCH application," Applied Economics Letters, Taylor & Francis Journals, vol. 9(15), pages 979-987.
    5. 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.
    6. Armitage, Seth, 1995. " Event Study Methods and Evidence on Their Performance," Journal of Economic Surveys, Wiley Blackwell, vol. 9(1), pages 25-52, March.
    7. 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 9775, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    8. 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.
    9. David Sparling & Calum G. Turvey, 2003. "Further thoughts on the relationship between economic value added and stock market performance," Agribusiness, John Wiley & Sons, Ltd., vol. 19(2), pages 255-267.
    10. 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.
    11. 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.
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