|
Being
liked or likeable is like
money in the bank - or at
least in the stock
market. For all teh
science of economy and
commerce, the bottom line
is still people buy what
they like and companies
with Super Bowl ads liked
by viewers appear to show
stronger following the
game - at least for a
while.
Which
has always been an
underlying theme of
buying stock, buy some
stock in products you
like and use. Seems
many of us take that
suggestion - at least on
Super Bowl Monday.
Full
story courtesy of
University
of Buffalo School of
Management
Stock
Price Correlated to
Likeability of
Super Bowl Ads
BUFFALO, N.Y. -- When
TV viewers like a
company's Super Bowl
commercial, the company's
stock price goes up,
according to a study by
researchers in the
University at Buffalo
School of Management and
Cornell University.
The study examined 529
commercials that aired
during 17 Super Bowls
from 1989-2005, and found
that investors favored
stocks of firms that
aired likeable Super Bowl
commercials.
The researchers used
ratings gathered by
USA Today's Ad Meter,
a real-time consumer
likeability ranking of
Super Bowl commercials.
They found that firms
with the most likeable
commercials had higher
than normal stock
purchases on the days
following the Super Bowl,
which increased the
firms' stock price.
"This reaction is
irrational because the
stock returns were based
solely on likeability of
the commercials," says
researcher Kenneth A.
Kim, associate professor
of finance in the UB
School of Management. "If
the likeability of the
commercials caused a
subsequent increase in
company sales, a stock
increase would make
sense, but we did not
find this to be the
case."
Firms with the
least-liked commercials
also experienced an
increase in stock price,
but not as much as firms
with the most-liked
commercials. Firms with
commercials that drew a
neutral response from
viewers did not
experience any
significant stock price
reaction, according to
Kim and co-researchers
Charles Chang, assistant
professor of finance in
Cornell University's
School of Hotel
Administration, and Jing
Jiang, a doctoral student
in the UB School of
Management.
The findings on liked
commercials demonstrate
how people often take
mental shortcuts rather
than go through longer
analytical processing
when making decisions
that should be complex,
Kim explains.
In this case, people
bought stock because they
liked a firm's TV
commercial instead of
making a decision based
on a firm's long-term
value.
These investors
appeared to use a mental
short cut known as
"representativeness bias"
when evaluating the
firms, Kim says. In
investment decision
making,
representativeness bias
is irrationally relating
one aspect of a firm to
its expected stock
returns.
"We're probably all
guilty of this bias in
our everyday lives. When
shopping for a used car,
we might think that a
clean car is a good car,"
explains Kim. "We might
think a person with a
nice haircut is a good
person. We might think a
tall person is a good
basketball player."
 In
investment
decision-making, another
example of this bias
occurs when investors
believe recent past
returns are
representative of what
they can expect in the
future.
Left: Kenneth Kim's
research shows that stock
prices are influenced by
the likeability of Super
Bowl television ads. |
