Food industry, beef supply, safety, stock market prices


This study examines the impact of unfavorable media coverage on the stock market prices of major food companies, an issue of increasing importance to the food industry. The study focuses on the 16 April 1996 Oprah Winfrey Show, a popular television program that raised questions about the safety of the U.S. beef supply. The show resulted in considerable controversy, and some cattle feeders blamed the show for a drop in cattle prices. The focus of this study is on the impact of the program at other stages of the food system. We examined the stock returns of two major beef packers and leading fast-food hamburger restaurants during the days immediately following the show. Standard event study methods were used to determine the normal behavior of stock returns and to identify abnormal stock returns that could be attributed to the program. Our results suggest that the program did have a negative and statistically significant impact on the stock returns of a portfolio of fast-food companies. One of the two beef packers also experienced adverse stock price reactions to the television program. The paper concludes with recommendations and avenues for further research.