When a Celebrity Endorser is Disgraced: A Twenty Five Year Event Study

S. Bratz, A.E. Molchanov, P.A. Stork

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

This paper investigates how the announcement of negative information about a celebrity endorser impacts firm value, as measured by abnormal stock returns. The unique data sample consists of 93 celebrity disgraces that occurred between 1986 and 2011, affecting firms listed on US stock exchanges. Some evidence is documented of negative and statistically significant abnormal returns around these events. Returns are lower when the disgrace attracts much media attention, or when the celebrity itself is prominent. No significant returns are observed when a firm decides to terminate its endorsement contract with the disgraced celebrity. Endorsement contracts for "edgy" products, for which consumers may actually be attracted by negative publicity, are less likely to be terminated. © 2013 Springer Science+Business Media New York.
Original languageEnglish
Pages (from-to)131-141
Number of pages11
JournalMarketing Letters
Volume24
Issue number2
DOIs
Publication statusPublished - 2013

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