The impact of supply chain disruptions on stock market returns during COVID-19

PurposeHow has COVID-19 impacted meat processors' stock returns? The authors evaluate the effects of supply chain disruptions (e.g. lockdowns and COVID-19 incidences among workers) on stock market prices of meat processors during the COVID-19 pandemic.Design/methodology/approachThis study uses...

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Bibliographic Details
Published in:Agricultural finance review 2022-07, Vol.82 (4), p.732-764
Main Authors: Nguemgaing, Hélène Flore, Sant’Anna, Ana Claudia
Format: Article
Language:English
Subjects:
Abnormal returns
Agribusiness
Beef
Bovine spongiform encephalopathy
Cattle industry
Coronaviruses
COVID-19
Disease transmission
E coli
Employees
Epidemics
Federal legislation
Food
Food processing industry
Investments
Investors
Meat
Meat processing
Outbreaks
Pandemics
Plant shutdowns
Poultry
Pricing
Processors
Return on investment
Securities markets
Social distancing
Statistical analysis
Stock exchanges
Supply chains
Trends
Viruses
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Summary:PurposeHow has COVID-19 impacted meat processors' stock returns? The authors evaluate the effects of supply chain disruptions (e.g. lockdowns and COVID-19 incidences among workers) on stock market prices of meat processors during the COVID-19 pandemic.Design/methodology/approachThis study uses an event study approach to examine the disruptions from COVID-19 through events such as plant shutdowns, the pandemic announcement, lockdown dates and the first case of COVID-19 outbreaks in meat processing plants. The dataset includes S&P 500, Google Trends, financial beta and data collected for 14 US publicly traded meat processing companies.FindingsResults show that nationwide events (e.g. announcement of the pandemic) had no statistically significant impact on average abnormal returns of meat processing companies. Individually, however, firms experienced negative abnormal returns. COVID-19-related events in individual meat processing companies had a temporary negative abnormal return in the days prior to the event.Originality/valueThis study has two main contributions. First, the authors estimate the effect of COVID-19 on the returns of meat processors. Second, the authors use Google Trends to estimate the expected stock markets returns of meat processing companies. This study provides insight to investors on the behavior of industry returns from events such as outbreaks that affect human health.
ISSN:0002-1466
2041-6326
DOI:10.1108/AFR-06-2021-0083