The Effect of Celebrity Endorsement Announcements oh Stock Prices

Abstract

Celebrities are being increasingly used to market products, yet no effort has been made to discern their impact on the marketplace or on the return to stockholders. This study tests the hypothesis that celebrity endorsers do not make a difference in improving a firm’s profitability and therefore its value. The paper uses standard event study methodology to test the hypothesis. The results show that celebrity endorsers have only a very weak effect on stock returns raising questions about the policy decisions of firms using celebrities.