Stock Market Reactions to Environmental News in the Food Industry

Few studies to date have addressed the relationship between the food industry’s environmental and financial performances although the industry is one of the biggest contributors of greenhouse gas emissions.We analyze the impact of environmental news about selected food companies on their stock prices. Results show that positive (negative) events that are the result of direct internal company actions lead to higher (lower) predicted returns, whereas events related to third-party opinions lead to smaller changes in predicted returns in short event windows. This study highlights the importance of conducting the analysis on a disaggregated basis by incorporating firm-level variables