The Financial Information Content of Celebrity Endorser: An Event Study Analysis

Munmun Mohanty

Paradigm, 2008, vol. 12, issue 1, 89-97

Abstract: The use of celebrities to endorse products has gained a lot of momentum despite being a costly method. Although extensive literature on the effects of celebrity endorsements on consumers’ brand attitudes and purchase intentions is available, little is known about the economic value of these endorsements. Research on this topic has typically focused on theories explaining the impact of celebrity endorsers on the consumers’ attitudes and intentions. We have tried to fill in the gap by using the case of Sachin Tendulkar and the event study method to find out the economic impact measured by the daily returns of the firms obtained from the share market. We have analysed the returns of ten companies (five endorsed by Sachin and the rest competing brands) and have found that positive news about the endorser has created market value for the firms endorsed by him and has eroded the market value of competing firms . However, it was found that there was no negative impact of the negative news on the market value of the firms in our data set. Hence, we conclude that negative news about a celebrity does not have any impact on the market value of the firm.

Keywords: firm value; event study; good news; bad news; abnormal returns (search for similar items in EconPapers)
Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:sae:padigm:v:12:y:2008:i:1:p:89-97

DOI: 10.1177/0971890720080111

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