KSU Researchers Evaluate the Cost of Meat and Poultry Recalls
Kansas State University (KSU) conducted a study, Costs of Meat and Poultry Recalls to Food Firms, using stock market prices and other data originating between 1994 and 2013 to determine how a company’s bottom line is ultimately affected when a meat or poultry recall arises.
For that 19 year period, KSU researchers looked at data from the U.S. Department of Agriculture’s (USDA) Food Safety and Inspection Service (FSIS) and uncovered more than 1,200 meat and poultry recalls were recorded; 163 of which came from 31 different publicly traded firms.
KSU’s research findings:
Stock price fluctuations were used in KSU’s study since specific financial data is difficult to obtain. Also, determining the hard cost of a recall involves many factors that are difficult to measure. For example, what stock prices do not account for is the cost that’s passed on to the consumers affected by the recall--medical bills, time off from work and the like.
So, what factors most impact stock prices of these publicly traded food firms?