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What are the odds? Underdog brands are consumer favorites

Author

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  • Borghesi, Richard
  • Naranjo, Andy
  • Ryngaert, Michael

Abstract

We examine the association between product endorser quality, performance expectations, and abnormal stock returns of corporate sponsors and identify a pronounced underdog effect — marginal excess returns to sponsors of the biggest underdogs are roughly double those of the biggest favorites. Results indicate that consumers are more excited about and more motivated to support brands having an underdog narrative.

Suggested Citation

  • Borghesi, Richard & Naranjo, Andy & Ryngaert, Michael, 2022. "What are the odds? Underdog brands are consumer favorites," Economics Letters, Elsevier, vol. 221(C).
    • Handle: RePEc:eee:ecolet:v:221:y:2022:i:c:s0165176522003883
    DOI: 10.1016/j.econlet.2022.110914
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    References listed on IDEAS

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    1. Eshghi, Kamran, 2022. "Are sports sponsorship announcements good news for shareholders? A meta-analysis," International Journal of Research in Marketing, Elsevier, vol. 39(1), pages 268-287.
    2. Kevin YC Chung & Timothy P. Derdenger & Kannan Srinivasan, 2013. "Economic Value of Celebrity Endorsements: Tiger Woods' Impact on Sales of Nike Golf Balls," Marketing Science, INFORMS, vol. 32(2), pages 271-293, March.
    3. Dirk F. Gerritsen & Saskia van Rheenen, 2017. "The value of winning: endorsement returns in individual sports," Marketing Letters, Springer, vol. 28(3), pages 371-384, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Sponsorship; Underdogs; Stock returns; Betting market; Odds;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • L67 - Industrial Organization - - Industry Studies: Manufacturing - - - Other Consumer Nondurables: Clothing, Textiles, Shoes, and Leather Goods; Household Goods; Sports Equipment
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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