Tiger Woods Destroyed $12 Billion in Market Value

If academics say it, then it must be true:

More difficult to determine, though, is how the scandal would hit his corporate sponsors. So Victor Stango and Christopher Knittel, two economic professors at University of California, Davis, decided to take a stab at quantifyiung the effect–performing what is called an “event study.” To do this, the professors looked at the nine sponsors for which stock price data was available and compared stock returns for those companies for the 13 days after the accident, both to the entire stock market and a group of competitors. The market value of the sponsors fell 2.3%.
The ones hit the hardest? The three sports-related companies–Gatorade (owned by PepsiCo), Nike and Electronic Arts. Those companies experienced a 4.3% decline in stock value. Meanwhile, consulting firm Accenture “experienced no ill effects.”
Overall, the pace of the losses slowed by Dec. 11, the day Woods announced he would take a leave from golf, but as of Dec. 17, shareholders had not recovered their losses, according to the study.

Posted by on December 28th, 2009 at 2:51 pm

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