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Macroeconomic factors and stock prices in the food and drink industry

Jana Šimáková (Department of Finance and Accounting, School of Business Administration in Karviná, Silesian University in Opava, Opava, Czech Republic)
Daniel Stavárek (Department of Finance and Accounting, School of Business Administration in Karviná, Silesian University in Opava, Opava, Czech Republic)
Tomáš Pražák (Department of Finance and Accounting, School of Business Administration in Karviná, Silesian University in Opava, Opava, Czech Republic)
Marie Ligocká (Department of Finance and Accounting, School of Business Administration in Karviná, Silesian University in Opava, Opava, Czech Republic)

British Food Journal

ISSN: 0007-070X

Article publication date: 5 June 2019

Issue publication date: 12 June 2019

Abstract

Purpose

The purpose of this paper is to estimate and evaluate the impact of macroeconomic fundamentals on stock prices of selected food and drink industry stocks during the period of 2005–2015, which saw the global financial crisis and its aftermath.

Design/methodology/approach

The paper employed correlation analysis and the Johansen cointegration test with the vector error correction mechanism for EU companies operating in the food and drink industry. The paper tested the effects of GDP, inflation and interest rates (IR) on the stock prices of companies from Austria, Croatia, Cyprus, Denmark, Finland, Germany, Ireland, Italy, Lithuania, Poland, Spain and the UK.

Findings

Based on the results, the authors can see that GDP has a generally positive effect on stock price development. In contrast, the relationship between stock prices and inflation and IR is negative in most cases.

Originality/value

Despite the fact that a majority of empirical research on companies in the food and drink sector was performed using the microeconomic approach, this paper used the macroeconomic approach and clearly demonstrated the effects of selected macro-variables on stock prices in selected EU markets. Macroeconomic factors shape the company’s performance and could potentially lead to persistent changes in supply and demand conditions in food and drink markets.

Keywords

Acknowledgements

Publication of this paper was supported by the Student Grant System of Silesian University (Project SGS/23/2016). The support is gratefully acknowledged.

Citation

Šimáková, J., Stavárek, D., Pražák, T. and Ligocká, M. (2019), "Macroeconomic factors and stock prices in the food and drink industry", British Food Journal, Vol. 121 No. 7, pp. 1627-1641. https://doi.org/10.1108/BFJ-12-2018-0839

Publisher

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Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited