THE EFFECTS OF REGULATION ON SALMON AQUACULTURE STOCKS
Oslo Stock excange is the main financial market for the world's largest salmon Aquaculture stocks. Most of the companies are based in Norway, but a few are also based in other countries, like Scotland and Faero Islands. Their operations are based in their home countries, but they also have international op erations in eg. Chile and Canada. Consequently, most of the companies and their operations are regulated by the The Norwegian Aquaculture Act.
Some have also engaged in numerous voluntarily governance activities the last years, such as the implementation of a global ecolabel (Aquaculture Stewardship Council (ASC)). Coming into force January 1st 2006, The Norwegian Aquaculture Act and its regulations have devloped during the years, with many aimed to take into account environmental challenges.
This paper will investigate how the financial markets reacts to the introduction of these regulations. Since they are not voluntarily, the study will shed light on how industry broad compulsory compliance requirements is interpreted by the markets. Is the reaction different to foreign companies?
Using daily stock price data and issue date for regulations, we will identify any abnormal returns around the time of regulation issue. We will also distinguish these regulations to see what makes the most impact, either positive or negative, on share prices. The paper will contribute to understand how financial markets react to government regulations in an important industry with tremendous growth and many controversies. This should be of interest to equity owners, policy makers and managers.
