Macroeconomic factors and stock prices in the food and drink industry
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
:Emerald Publishing Limited
Copyright © 2019, Emerald Publishing Limited