Graduation Year

2018

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Michael Kuehlwein

Reader 2

Sean Flynn

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Terms of Use for work posted in Scholarship@Claremont.

Rights Information

© 2018 Katherine C. Baughman

Abstract

What role do celebrity endorsements play in determining the success of a sports apparel company brand, such as Nike, Inc. (Nike) and Under Armour? Each year, Nike and Under Armour spend hundreds of millions of dollars marketing their athletic apparel, footwear, accessories and gear using paid celebrities and professional athletes. Can marketing videos prominently featuring inspirational athletes increase a company’s profitability and stock price value, and lead to stronger brand recognition that could not only convince its current customers to buy products, but also reach new consumers and expand its revenue?

By collecting data on Nike and Under Armour’s YouTube videos from July 2010 to November 2017, this study uses characteristics of the companies’ videos, such as professional athletic presence, gender, purpose, intended audience and number of views, to determine whether a celebrity is consistently positively correlated with stock price changes. Two tests produced conflicting results: Celebrity presence was only statistically significant in positively affecting Under Armour’s daily stock price immediately, but not in either company’s weekly or monthly stock prices. Additionally, lack of celebrity presence was statistically significant in negatively impacting Under Armour’s change in monthly stock price. These mixed results demonstrate the debatable impact a celebrity endorsement has on a company’s stock market valuation. The conclusion discusses potential factors that may have contributed to Under Armour’s stock price fall.

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