Purpose

The purpose of this paper is to determine the impact of the Supreme Court’s ruling that POM Wonderful could sue Coca-Cola, a competitor, for misrepresentation of their products. This decision has the potential to alter the legal environment for soft drink and food processing firms.

Design/methodology/approach

The author conducted an event study of the shareholder value effects of the court decision. The analysis estimates the market responses to the decisions. To control the effects of market-wide fluctuations, the author uses two alternative models of the returns generating process to calculate abnormal returns, the capital asset pricing model (CAPM) and the Fama-French 3-factor models.

Findings

The author hypothesizes that soft drink firms will be negatively impacted by the Supreme Court’s decision, because it may limit their ability to market beverages with a low percentage of expensive juices. Consistent with this argument, the author finds that the stock prices of publicly traded soft drink firms reacted negatively to the announcement of the Supreme Court’s decision. The author also hypothesizes that there may be a spillover effect to food processing firms. These firms may also be at risk to being sued by competitors for exaggerated claims. Contrary to this argument, the author finds no spillover effect to other types of food processing firms. Thus, the decision did leave an aftertaste for the soft drink industry but not the food processing industry.

Originality/value

This study is the first to examine the impact of the right to sue competitors in the food industry for misrepresentation of products.

中文翻译：

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POM Wonderful留下了回味吗？

目的

本文的目的是确定最高法院关于POM Wonderful可以起诉竞争对手可口可乐公司对其产品进行虚假陈述的裁决的影响。该决定有可能改变软饮料和食品加工公司的法律环境。

设计/方法/方法

作者对法院判决的股东价值影响进行了事件研究。该分析估计市场对决策的反应。为了控制整个市场波动的影响，作者使用收益产生过程的两种替代模型来计算异常收益，即资本资产定价模型（CAPM）和Fama-French三因素模型。

发现

作者假设软饮料公司将受到最高法院判决的负面影响，因为软饮料公司可能会限制其销售价格低廉的果汁的饮料的能力。与这一论点一致，作者发现，公开交易的软饮料公司的股价对最高法院宣布这一决定产生了负面反应。作者还假设，可能会对食品加工企业产生溢出效应。这些公司还可能面临被竞争对手起诉的夸大索赔要求的风险。与该论证相反，作者发现对其他类型的食品加工企业没有溢出效应。因此，该决定确实给软饮料行业留下了余味，而对食品加工行业却没有回味。

创意/价值

这项研究是第一个研究针对食品虚假陈述而起诉食品行业竞争者的权利的影响。