Two professors of economics at the University of California (Davis), Victor Stango and Christopher Knittel, came out with a new scholarly study that shows,
“Shareholders of Nike, Gatorade and other Tiger Woods sponsors lost a collective $5 to $12 billion in the wake of the scandal involving his extramarital affairs.” (UC Davis).
As expected, the Wall Street Journal put out an article to feed the Tiger Woods Frenzy.
So, collectively, the sponsors of Tiger Woods appear to have lost a few percentage points in stock value due to his actions.
But do investors really care? Is the loss even substantial?
The truth is that Tiger Woods has probably made more than this “$5-12 Billion” for all these companies. So after contributing billions, what’s the hassle about a few peanut billions? He’s also likely to contribute a few more billions over the next few years.
If you look at the actual article you will also notice that the margin of error on the study was quite large and that the price effect from the event was taken mostly by looking at the price change in the parent company of the sponsor.
I don’t buy it.
Here is the actual paper. It’s only 11 pages long (with graphs and tables) in case you want all the details.
Shareholder Value Destruction following the Tiger Woods Scandal
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