The impact of food safety events on the value of food-related firms: An event study approach

Seo, Soobin; Jang, SooCheong; Li, Miao; Almanza, Barbara; Behnke, Carl

doi:10.1016/j.ijhm.2012.07.008

Cited by 59 publications

(46 citation statements)

References 47 publications

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“…The effects of the product recall are indeed immediate in the brand ecosystem, which has significant implications for when and how managers deal with a product recall. These findings support and are consistent with the conclusions from Seo et al (2013).…”

Section: Variablessupporting

confidence: 92%

“…Seo et al (2013) asserted that the impact of product harm is most acute in the first 2 days following the event, but recovery can occur within a year. In other research, after studying the interactions among marketing mix variables, the extent of negative publicity and the acknowledgment of product harm blame, Cleeren et al (2013) concluded that what may be good for the transgressing brand may not be good for the category and vice-versa.…”

Section: The Impact Of Negative Spilloversmentioning

confidence: 99%

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Measuring the short-term spillover impact of a product recall on a brand ecosystem

Mackalski

Belisle²

2015

J Brand Manag

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Robert Mackalskiis a branding specialist. He lectures at McGill University, in Montreal, Canada, and focuses much of his professional time working with high-growth companies on their marketing and branding strategies. Following his MBA, he cofounded the e-commerce company, Peachtree Network, and led the company's efforts in sales and marketing. After the company became public, he completed his doctorate on branding and now splits his time among teaching, academic research at McGill, and support of entrepreneurial companies through advisory and consulting work. Jean-Francois Belislespecializes in data-driven decision-making applied to digital marketing, retailing and risk management. Prior to his current role, he worked as a consultant in strategy and analytics for large companies (P&G, Bell, Development Bank of Canada and Jean Coutu) and supported entrepreneurial companies through advisory and consulting work. He currently lectures at the MBAlevel at Université Laval. He pursued PhD studies in Computational Statistics and Marketing at McGill University, holds a Master degree in Marketing from HEC Montréal, and has a Bachelor in Economics from the Université de Montréal.ABSTRACT This research examines the short-term impact of a product recall on a brand ecosystem by investigating the following questions: How do product recall spillover effects spread to (i) the recalled brand's related product categories, (ii) competing brands, and (iii) private label brands? Studying the 2003 Land O'Lakes butter recall case using a difference-in-differences model, our research shows that negative spillovers occur within the same brand family, carry over to private label brands and then quickly dissipate, but do not carry over to competitor brands. Managerial implications and directions for future research are provided.

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Section: Variablessupporting

confidence: 92%

Section: The Impact Of Negative Spilloversmentioning

confidence: 99%

Measuring the short-term spillover impact of a product recall on a brand ecosystem

Mackalski

Belisle²

2015

J Brand Manag

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“…The economic impacts of food safety recalls have been explored extensively. Studies have examined the impact of food safety recalls on company stock prices (21)(22)(23)(24), retail meat and livestock prices (2,3,(25)(26)(27), and meat demand (4,(28)(29)(30). The impact of recalls is known to have both short-(4) and long-run (31) implications within the species for which the recall occurred and spillover effects into other species.…”

Section: Impact Of Food Recallsmentioning

confidence: 99%

Consumer Reactions to E. Coli and Antibiotic Residue Recalls: Utility Maximization vs. Regret Minimization

Dennis¹,

Ajewole²,

Bergtold³

et al. 2020

Front. Vet. Sci.

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Food safety remains a major issue to many consumers. Previous studies examining the economic impact of food safety recalls have focused on Class I recalls. Antibiotic residue in meat products, a Class II recall, has increased in consumer importance yet little is known about how much research and development expenditure should be allocated to reduce antibiotic residue pre-and post-harvest. This study compares demand elasticities and the decrease in willingness to pay in response to either an E. coli (Class I) or antibiotic residue (Class II) recall. We compare and contrast two competing behavioral frameworks, Random Utility and Regret Minimizing. Modeling behavior using the random regret framework is found to be more powerful for assessing consumer responses. In addition, we explore if different groups of consumers exist that either maximize utility or minimize regret. Consumer devaluations of E. coli (Class I) are 40-65% larger than antibiotic residue (Class II). Approximately 60% of consumers are identified as regret minimizers and 40% were identified as utility maximizers. While industry response and government policy recommendations differed conditional on modeling framework, the regret minimizing framework required smaller price discounts than regret minimizing to maintain the same level of market share.

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“…Marler Clark attorneys have represented victims of most foodborne illness outbreaks since 1993, when the law firm was established to handle the Jack in the Box case. Marler Clark's archive is considered a reliable source for restaurant-associated foodborne illness outbreaks (Seo et al, 2013). When a lawsuit has been filed following a food crisis, it indicates that the crisis is serious, creating the possibility of a spillover effect on Jack in the Box.…”

Section: Datamentioning

confidence: 99%

“…In responding to other firms' food crises, a firm with a food crisis history may be affected by unrelated crises, that is, by a negative spillover effect. Seo et al (2013) examined the impact of food safety events on firms, asserting that it takes approximately one year to recover from a crisis after an outbreak. Although their study investigated the impact of food crises on firms' financial performance, the findings were limited to short-term impacts.…”

Section: Introductionmentioning

confidence: 99%

The negative spillover effect of food crises on restaurant firms: Did Jack in the Box really recover from an E. coli scare?

Seo

Jang

Almanza

et al. 2014

International Journal of Hospitality Management

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a b s t r a c tDespite the enormous impact of food crises on restaurants, limited understanding of their long-term impacts and associated factors has undermined crisis managers' ability to handle crisis situations effectively. This article investigated the long-term impact of food crises on the financial performance of restaurant firms and identified the factors that influenced this impact. This explanatory study examined the case of Jack in the Box, whose 1993 Escherichia coli scare was the first and largest restaurant-associated food crisis in modern times. An event study method was used to uncover stock price movements of Jack in the Box, in conjunction with 73 unrelated food crises that occurred from 1994 to 2010. Stock prices of Jack in the Box exhibited significantly negative responses to other firms' food crises, moreover, the negative spillover effect was stronger if the crisis occurred closer in time, was similar in nature, and was accompanied with no recall execution. These findings shed light on the long-term financial impact of food crises and offer insights for crisis managers to develop more effective crisis management strategies.

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The impact of food safety events on the value of food-related firms: An event study approach

Cited by 59 publications

References 47 publications

Measuring the short-term spillover impact of a product recall on a brand ecosystem

Measuring the short-term spillover impact of a product recall on a brand ecosystem

Consumer Reactions to E. Coli and Antibiotic Residue Recalls: Utility Maximization vs. Regret Minimization

The negative spillover effect of food crises on restaurant firms: Did Jack in the Box really recover from an E. coli scare?

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