Is healthy food convenient for health and pockets?

Abstract

Purpose

The purpose of the study is to analyse the stock market response to a spin-off announcement concerning a food and beverage (F&B) business unit.

Design/methodology/approach

The study uses a sample of approximately 107 spin-offs, 84 of which are operating in the F&B sector surveyed by the Zephyr–Bureau Van Dijk database. The event study approach is applied to the identified sample. The results demonstrate that the effect of an event on the stock price of a firm allows identification of the abnormal return as the difference between the current and expected returns.

Findings

The study finds that investors adjust positively to the closing of the spin-off deal. The peak of performance is reached on the day of the announcement.

Research limitations/implications

Empirical evidence could be distorted by the mono-industry database, analysed in a “favourable time span.” The role of information transfer on spin-offs, in terms of diffusion and reduction of information asymmetries, could be developed.

Originality/value

The study represents a pioneering investigation of a category of mono-industry spin-offs. Previous doctrinal contributions underline the fact that abnormal returns corresponding to announcement effects are amplified in the case of information asymmetries but underestimate the effects deriving from the strategic business unit's nature as a spin-off.

Citation

Graziano, E.A., Fiano, F., Usai, A. and Cipullo, N. (2020), "Is healthy food convenient for health and pockets?", British Food Journal, Vol. 122 No. 4, pp. 1099-1111. https://doi.org/10.1108/BFJ-06-2019-0455