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When Bad Things Happen to the Endorsers of Good Products
Therese A. Louie, Robert L. Kulik and Robert Jacobson
Vol. 12, No. 1 (Feb., 2001), pp. 13-23
Published by: Springer
Stable URL: http://www.jstor.org/stable/40216582
Page Count: 11
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We investigate how a firm's financial performance (as measured by stock returns) is influenced when celebrity endorsers become involved in undesirable events, i.e., events that have a deleterious effect on the spokespersons. We find that the stock market reaction to these events is negatively related to spokesperson blameworthiness. The lower (higher) the culpability, the higher (lower) the stock return. Interestingly, it is only those firms associated with spokespersons having high culpability that tend to experience losses in stock market value. In contrast, we find that events rated at or below the mean level of blameworthiness are associated with positive stock market returns.
Marketing Letters © 2001 Springer