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The Economic Worth of Celebrity Endorsers: An Event Study Analysis

Agrawal, Jagdish and Kamakura, Wagner A., The Economic Worth of Celebrity Endorsers: An Event Study Analysis, Journal of Marketing (1995).

7 Pages Posted: 14 Apr 2014  

Jagdish Agrawal

California State University, East Bay

Wagner A. Kamakura

Rice University

Date Written: July 1995

Abstract

Celebrity endorsement has become a prevalent form of advertising in the United States. Despite extensive litera­ture on the effects of celebrity endorsements on consumers' brand attitudes and purchase intentions, little is known about the economic value of these endorsements. Research on this topic has typically focused on theories ex­plaining how celebrity endorsements influence consumers' attitudes and intentions. The authors assess the impact of celebrity endorsement contracts on the expected profitability of a firm by using event study methodology. Their approach assumes that the announcement of a celebrity endorsement contract, usually widely publicized in the business press, is used as information by market analysts to evaluate the potential profitability of endorsement ex­penditures, thereby affecting the firm's expected return. Announcements of 110 celebrity endorsement contracts were analyzed. Results indicate that, on average, the impact of these announcements on stock returns is positive and suggest that celebrity endorsement contracts are generally viewed as a worthwhile investment in advertising.

Suggested Citation

Agrawal, Jagdish and Kamakura, Wagner A., The Economic Worth of Celebrity Endorsers: An Event Study Analysis (July 1995). Agrawal, Jagdish and Kamakura, Wagner A., The Economic Worth of Celebrity Endorsers: An Event Study Analysis, Journal of Marketing (1995).. Available at SSRN: https://ssrn.com/abstract=2424837

Jagdish Agrawal (Contact Author)

California State University, East Bay ( email )

25800 Carlos Bee Boulevard
Hayward, CA California 94542
United States

Wagner A. Kamakura

Rice University ( email )

6100 South Main Street
P.O. Box 1892
Houston, TX 77005-1892
United States
(713) 348-6307 (Phone)

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