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

Hélène Flore Nguemgaing (Division of Resource Economics and Management, West Virginia University, Morgantown, West Virginia, USA)
Ana Claudia Sant’Anna (Division of Resource Economics and Management, West Virginia University, Morgantown, West Virginia, USA)

Agricultural Finance Review

ISSN: 0002-1466

Article publication date: 8 October 2021

Issue publication date: 7 July 2022

253

Abstract

Purpose

How 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/approach

This 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.

Findings

Results 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/value

This 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.

Keywords

Acknowledgements

The authors would like to thank the Editor and two anonymous reviewers. The authors also appreciated the discussions with Dr. Kevin Kim and comments from participants at NAREA 2021 and SAEA 2021.

Funding: Scientific Article No. 3412 of the West Virginia Agricultural and Forestry Experiment Station, Morgantown. This material is based upon work that is partially supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture, [Multi-State Hatch Project] under [WVA00731].

Citation

Nguemgaing, H.F. and Sant’Anna, A.C. (2022), "The impact of supply chain disruptions on stock market returns during COVID-19", Agricultural Finance Review, Vol. 82 No. 4, pp. 732-764. https://doi.org/10.1108/AFR-06-2021-0083

Publisher

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Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

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