The Value of Celebrity Endorsements: A stock Market Perspective

Forthcoming in Marketing Letters

23 Pages Posted: 20 Jan 2009 Last revised: 31 May 2010

See all articles by Alexander Molchanov

Alexander Molchanov

Massey University

Haina Ding

IAE (instituts d'administration des entreprises)

Philip A. Stork

Vrije Universiteit Amsterdam, School of Business and Economics; Tinbergen Institute - Tinbergen Institute Amsterdam (TIA)

Date Written: May 31, 2010

Abstract

Are celebrity endorsements worthwhile investments in advertisingā€˜ To answer this question we analyze a unique sample of 101 announcements made between 1996 and 2008 by firms listed in the US. Internet is the main medium of communication for these announcements. We employ event study methodology and document statistically insignificant abnormal returns around the announcement dates. This finding is consistent with the notion that the incremental benefits from celebrity endorsements closely match the incremental costs due to such contracts. Further, we investigate if the announcement date return depends on a number of characteristics that are often used in the endorsement literature. As a result, we find that endorsements of technology industry products coincide with significant positive abnormal returns around the announcement dates. Finally, we find weak support for the match-up hypothesis between celebrities and endorsed products.

Suggested Citation

Molchanov, Alexander and Ding, Haina and Stork, Philip A., The Value of Celebrity Endorsements: A stock Market Perspective (May 31, 2010). Forthcoming in Marketing Letters. Available at SSRN: https://ssrn.com/abstract=1330351

Alexander Molchanov

Massey University ( email )

Auckland
New Zealand

Haina Ding

IAE (instituts d'administration des entreprises) ( email )

4 Chemin de Bellevue
Annecy, 74940
France
+33450092422 (Phone)

Philip A. Stork (Contact Author)

Vrije Universiteit Amsterdam, School of Business and Economics ( email )

De Boelelaan 1105
Amsterdam, 1081HV
Netherlands

Tinbergen Institute - Tinbergen Institute Amsterdam (TIA) ( email )

Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands

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