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Marketing Letters 12:1, 1323, 2001.# 2001 Kluwer Academic Publishers. Printed in The Netherlands.

When Bad Things Happen to the Endorsers of GoodProducts

THERESE A. LOUIE*, ROBERT L. KULIK AND ROBERT JACOBSON

Business School, Box 353200, University of Washington, Seattle, WA 98195

Fax: 206-685-9392; e-mail: [email protected]

The authors are listed in a randomly chosen order. All are equally blameworthy.

Accepted June 18, 2000

Abstract

We investigate how a rm's nancial performance (as measured by stock returns) is inuenced when celebrity

endorsers become involved in undesirable events, i.e., events that have a deleterious effect on the spokespersons.

We nd that the stock market reaction to these events is negatively related to spokesperson blameworthiness. The

lower (higher) the culpability, the higher (lower) the stock return. Interestingly, it is only those rms associated

with spokespersons having high culpability that tend to experience losses in stock market value. In contrast, we

nd that events rated at or below the mean level of blameworthiness are associated with positive stock market

returns.

Key words: celebrity endorsers, blameworthiness, event study

They're humans. When you sign on to a celebrity, you sign on to the whole package

the good, the bad, and the ugly. Becky Madeira of PepsiCo (Conrad 1995).

The use of celebrities as product endorsers has long been an advertising tactic of

companies. An estimated 20% of television commercials feature a celebrity endorser

(Belch and Belch 1998). The primary reason rms hire celebrity endorsers is that famous

individuals have ``celebrity equity'' (e.g., awareness and associations) that rms hope can

be transferred to the brand. As such, celebrities offer the advantage of greater potential

impact than unknown spokespersons. This impact is consistent with the nding of Agrawal

and Kamakura (1995) who report a positive stock market response when a companyinitially hires a famous spokesperson.

However, when a rm signs on to a celebrity, it signs on to the possibility that he or she

may become involved in an event that has a deleterious effect on the spokesperson, which

we label an ``undesirable event.'' Over the years, celebrity endorsers have been involved in

a wide range of behaviors that are undesirable to them, including, for example, incurring

injuries, dealing with substance abuse, or getting caught engaging in unlawful behavior.

The rst celebrity endorser was Lillie Langtry, an English actress who in 1893 appeared on

the packaging of Pears Soap. She was also the rst celebrity endorser dropped by a

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company because her reputation for being promiscuous eventually clashed with Pears'

desired brand image. As such, as long as there have been celebrity endorsers there has

been the potential for them to become involved in undesirable events.

McCracken (1989) proposed that the effectiveness of the endorser depends upon the

meanings that the celebrity brings to the endorsement process. This ``meaning transfer

model'' depicts famous individuals as being endowed with cultural meanings that can be

transferred via endorsements to products and then to consumers. When an undesirable

event occurs, it can change the effectiveness of the celebrity as a spokesperson by, for

example, inuencing the target market's awareness of the celebrity and the meanings of the

celebrity. This, in turn, can inuence the awareness of and attitude toward the brand, which

affects current and future term sales and earnings, and thereby rm value. What happens toa rm's economic value when an undesirable event befalls its spokesperson? It may seem

that these undesirable events would have a negative impact on rm value. For example,

reputation-damaging events affecting a celebrity can transfer to a sponsoring company. Till

and Shimp (1998) found, in an experimental setting, that negative information about a

spokesperson can damage product evaluation through the associative link between brand

and celebrity. Other undesirable events, such as physical injuries, can limit a spokes-

person's participation in the activity generating fame, which can reduce the individual's

celebrity status and, hence, effectiveness as an endorser.

There is, however, anecdotal evidence that suggests that undesirable events can some-

times have a positive effect on rm value. The public reacted very positively to Nancy

Kerrigan after an assailant attempted to disable her from Olympic competition. Firms

seemed to recognize her favorable appeal: those associated with Kerrigan aired advertise-ments that featured her, and she received numerous post-incident endorsement offers.

While having a deleterious component from the standpoint of the celebrity, some types of

undesirable events may increase the effectiveness of the endorser and, as such, enhance

rm value.

The discrepant responses to undesirable events highlight the importance of under-

standing how they inuence rm value. Despite the abundance of news stories about

celebrities' woes, we know of no work that investigates how such incidents affect rms

nancially. When examining this issue it is important to focus not just on undesirable

events themselves, but upon reactions to the endorsers and, hence, to associated brands. As

such, we hypothesize that the impact of undesirable events on rm value depends upon the

extent to which celebrities are blameworthy for causing the undesirable incidents that

befell them. Although a number of different dimensions might account for the differential

stock market response to undesirable events, we hypothesize that blame is a centralconsideration as research has isolated it as a key determinant of perceptions about the

event (e.g., negativity). Making use of event study methods, we investigate how blame-

worthiness moderates the inuence of undesirable events on rm stock market value1.

1While focused on investor expectations and not actual consumer response, analysis of stock market reaction does

provide insight into consumer reaction as well. Under the efcient markets hypothesis, investors are not

systematically fooled. As such, the stock market reaction provides an unbiased estimate of changes in future

cash ows induced by the change in consumer attitudes.

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Further, we assess how blameless (culpable) an endorser must be for the event to have a

positive (negative) effect on rm nancial performance.

Celebrity Blameworthiness for Undesirable Events

When an undesirable event occurs, there is the tendency to ascertain the blameworthiness

of those involved. Like anyone else, celebrities can be the victims or the perpetrators of

undesirable events. Research provides a framework within which to examine the range of

reactions from blamelessness to blameworthiness. Weiner (1980) found that when an

individual is not culpable for undesirable actionssuch as when a person collapses as a

result of being illresponses to that individual include sympathy and liking. In contrast,

when an individual is blameworthy for undesirable actionssuch as when a person

collapses as a result of being drunkreactions to that individual include anger and

reduced levels of liking (DeJong 1980; Weiner 1980). In short, responses to events (e.g.,

whether reactions are clearly negative or are more sympathetic) depend upon the

culpability of those involved. Discrepant reactions allow us to posit that changes in rm

value following an undesirable celebrity event will be negatively related to celebrity

endorser blameworthiness.2

We have observed instances of rm behavior that acknowledge the broad range of

responses to blameworthiness. For example, the public reacted with great fondness for Keri

Strug after her efforts to help the 1996 U.S. women's gymnastic team win a gold medal

resulted in an injury that destroyed her dream of competing in individual-level Olympiccompetition. Although the injury was undesirable for Strug at the time, the public

sentiment led many rms to request her services as an endorser. In addition to seeking

the company of beloved low blame spokespersons, rms seek to distance themselves from

endorsers involved in high blame events in order to avoid the transfer of unfavorable

attitudes from celebrity to brand. For example, PepsiCo terminated its agreement with

Mike Tyson (even prior to his being accused and convicted of rape) after a series of

blameworthy actions (e.g., alleged spousal abuse) sparked controversy.

Methodology

We use ` event study'' methodology to assess empirically the impact of endorserundesirable events on rm nancial performance. Event study analysis measures the

abnormal change in stock price (i.e., the change in market expectations of the present value

of future cash ows) associated with the release of new information (see, for example,

Brown and Warner 1985 for a survey). Since the stock market rapidly assimilates the

2Phenomenon such as ``defensive distortions'' (Pyszczynski et al. 1993) may partially offset favorable reactions of

sympathy toward blameless celebrities. This would occur if an individual, in an attempt to make unlucky events

seem less random, downgraded victims of undesirable events so that they appeared to deserve their fate.

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event's nancial implications into the price of the security, the abnormal stock return

surrounding an event reects market expectations of its long-term nancial impact on rm

value. The technique is a mainstay of research in nance and has seen use in marketing

beginning with Horsky and Swyngedouw (1987). Rather than just assessing the level of

abnormal return associated with the event occurrence, we allow for differing levels of

abnormal return depending on spokesperson blame. That is, our empirical analysis is based

on a regression linking abnormal stock return to blameworthiness.

Abnormal Stock Market Return

We calculate the abnormal stock return (ARit) as the difference between the actual return

and the expected return had the event not occurred, where the expected return is based on

``the market model.'' That is, ARit Rit ai biRmt where Rit is the stock return ofrm i for day t, Rmt is the equal weighted index of market returns on day t, andai, bi are the

coefcients obtained from estimating the market model (Rit ai biRmt eit) using 263trading days of data (about one year) ending 25 days prior to the event as our estimation

sample.

Cumulative abnormal returns are calculated as the sum of abnormal returns for the

``event window.'' That is, CARi T

ttARit for the event window beginning at day t and

ending at day T.

The Event Window

Consistent with previous research, we allow our event window to begin 5 trading days

prior to the rst announcement of the event in the media, and end as late as 10 trading days

after the announcement. Event windows may begin prior to the event date to allow for the

possibility that information may leak out before an announcement or publication in the

news media.3 They may continue days after the event to allow the market to fully

incorporate all the information associated with the event (e.g., additional news about the

event often occurs a number of days after the initial announcement).

Event Day Clustering

As some celebrities serve as endorsers for multiple rms, our data will be clustered (i.e.,

multiple rms will have common calendar days for the event). This may induce correlated

returns such that ordinary least squares estimation would generate unbiased coefcient

3Although we allow for effects prior to publication in the news media, we speculate that this is not the case.

Events in our sample are likely to be truly unanticipated. For example, stock market participants did not have

advance knowledge of James Worthy's solicitation of a prostitute. Further, the activities of celebrities is ``so

newsworthy'' that the media are focused on their actions and are rarely beaten to the story. As such, we structure

our event windows either as pre-event or post-event.


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estimates but biased standard errors (Collins and Dent 1984). To overcome this potential

problem, we base our analysis on a portfolio of rms (Schwert 1981). That is, rather than

analyzing individual stocks, stocks having the same calendar date for an event (i.e., rms

employing the same endorser at the time of the undesirable event) are aggregated into an

equal weighted portfolio.

Estimation

To assess the effect that blameworthiness has on cumulative abnormal returns we estimate

the model:

CARi d0 d1 blamei eiX 1

The null hypothesis is that abnormal return will not depend on blame (i.e., d1 0). Analternate hypothesis is that the stock market reaction is negatively related to blame (i.e.,

d1 ` 0).Of additional interest is determining whether conditions exist where an undesirable

event could have a positive as opposed to a negative effect on rm value. If indeedd1 ` 0,this condition would be reected in our analysis by a signicant positive value for d0. The

ratio jd0ad1j indicates the level of blame where the inuence of the event moves fromhaving a positive effect on abnormal return to a negative effect (i.e., where the stock return

versus blame function intercepts the X-axis). That is, events with levels of blame less

(greater) than jd0ad1j will have a positive (negative) effect on rm value.

The Data

Celebrity endorsers' undesirable events were extracted from a search of wire services'

press releases as well as newspaper and magazine articles reported on the LexisaNexisdatabase. We dened an undesirable event as one that is detrimental to the spokesperson,

such as an incident that i) damages the reputation or credibility of the endorser, or ii)

physically injures the endorser and potentially damages his or her career.

The search for announcements about undesirable events was accomplished by i)

searching in popular press survey articles for undesirable actions and incidents involving

celebrities, ii) searching on types of events, such as career-ending athletic injuries, and iii)

pooling the authors' knowledge of undesirable events involving celebrity spokespersons.The search uncovered 52 events involving 31 endorsers (24 athletes, 5 musicians, and

2 actors). The events were spread over the period from 1980 to 1994. The data are

consistent with the perception that the frequency of celebrity undesirable events is

increasing (Stasio 1994). For the last three years of our sample, an undesirable event

occurred at a rate of approximately once every six weeks. As such, most of our

observations are coming from the most recent years.

We then used the Lexisa Nexis Database to nd which publicly traded companies thecelebrity was endorsing at the time of the event. For 48 of these events, which involved 39

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different types of activities, we found that the spokesperson was endorsing a product for

one or more publicly traded rms. Matching corporations with events, 128 observations

were obtained where the rm's stock price was reported in the University of Chicago's

Center for Research in Security Prices (CRSP) database.

We then sought to determine the extent of blame associated with each type of

undesirable event. We used two samples (students and an expert) in order to develop a

composite measure of blame. That is, we formed an aggregate measure of blame based on

an equal weighting of student blame perceptions and of expert opinion blame perceptions.

Although we also analyze each blame sample separately as a sensitivity check, previous

work, (e.g., Makridakis and Winkler 1983), suggests that the composite blame measure

offers the potential for a more accurate assessment of blame than the individualcomponents. Forty-three undergraduate marketing students (60% female and 40% male)

completed a survey that described each of the events and asked them to assess the level of

blame. A Chief Executive Ofcer of an athletic shoe company who was highly experienced

with celebrity endorser issues completed the same survey administered to the students.

Our survey instrument asked respondents to attach a level of blame to each type of

undesirable event. In order to extract a blame measure that did not include confounding

factors specic to the individual endorserssuch as the latter's' credibility, reputation, or

attractivenessthe identities of the endorsers were not revealed.4 Subjects were unaware

that the events were associated with endorsers at all. For example, we described a Jennifer

Capriati undesirable event as follows: ``A famous individual is found shoplifting.'' After

reading each description, the subjects were asked to rate the corresponding level of blame

on a scale of one (1 ``the individual is not at all to blame for the behavior'') to eight(8 ` the individual is completely to blame for the behavior''). The order of thedescriptions was varied to correct for possible fatigue effects.

Table 1 reports descriptive statistics for the student-based blame measure, the expert

judgment-based blame measure, and the composite measure. For the student sample, the

blame ratings ranged from a low of 1.39 for the description of the attack on Nancy

Kerrigan, to a high of 7.70 for the descriptions of John Daly's wife beating and Andre

Rison's speeding at 111 miles per hour. The mean rating was 5.40. The blame ratings of the

expert were very similar to those reported by the students. The mean for the expert opinion-

based blame measure was 5.46 and the correlation between the two measures was .85.

Results

We make use of generalized least squares (i.e., adjusting for possible heteroscedasticity

based on the estimated variance from the market model estimation) to estimate Equation 1.

Table 2 presents our results from estimating Equation 1 for various event windows.

4We undertook sensitivity analysis that involved asking a different set of respondents to assess blameworthiness

when the identity of the celebrity endorser involved in each event was provided. This approach generated i) a

blame measure very highly correlated (.91) with the one used in our analysis and ii) results in close

correspondence to those we report. None of the conclusions of our study were affected.


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The rst fact that can be noted from Table 2 is that we nd no evidence that the nancial

markets anticipate these events. The coefcient estimates for both d0 andd1 are small and

statistically insignicant for all event windows prior to the announcement date. For

example, for the event window beginning 5 days prior to the event and ending 1 day before

it, the estimates for both d0 (i.e., .0004) andd1 (.0003) are indistinguishable from 0. Theseresults are consistent with our expectation that the nancial markets did not have advance

knowledge of the events and that the media are focused on the actions of celebrities.

Table 1. Descriptive Statistics Blame Measure (Number of Behaviors 39)

Student-Based Sample Expert Judgement-Based Sample Composite Measure

Mean 5.40 5.46 5.43

Standard Deviation 1.84 2.16 1.93

75 Percentile 6.91 8.00 7.24

Median 5.89 6.00 5.65

25 Percentile 3.60 4.00 3.80

Correlation Matrix

Student-Based 1.00 0.85 0.96

Expert Judgement-Based 0.85 1.00 0.97

Composite 0.96 0.97 1.00

Student-Based Sample: 43 undergraduate marketing students

Expert Judgement-Based Sample: Chief executive ofcer of athletic shoe company

Composite Measure: Equal weighted average of Student-based and Expert Judgement-based samples

Scale: one (1 ``the individual is not at all to blame for the behavior'') to eight (8 ` the individual iscompletely to blame for the behavior'').

Table 2. Effect of Blameworthiness on Cumulative Abnormal Stock Return CARi d0 d1 Blamei ei(Portfolio Approach: #obs 48)

Event window d0 t-stat d1 t-stat d0ad1 t-stat

75 70.0042 [70.69] 0.0013 [1.38] 73.18 [71.23]

75,74 70.0014 [70.17] 0.0011 [0.83] 71.37 [70.22]

75,74,73 70.0058 [70.65] 0.0015 [1.03] 74.01 [71.37]

75,74,73, 72 70.0021 [70.21] 0.0010 [0.65] 72.03 [70.29]

75,74,73,72,71 0.0004 [0.04] 0.0003 [0.15] 1.73 [0.03]

0 0.0084 [2.12]7

0.0011 [7

1.69]7

7.96 [7

4.24]0,1 0.0136 [2.48] 70.0017 [71.93] 78.11 [74.79]

0,1,2 0.0245 [4.34] 70.0034 [73.78] 77.26 [79.95]

0,1,2,3 0.0288 [4.29] 70.0042 [74.03] 76.73 [710.72]

0,1,2,3,4 0.0360 [4.20] 70.0053 [73.89] 76.83 [710.35]

0,1,2,3,4,5 0.0337 [3.78] 70.0060 [74.29] 75.59 [710.01]

0,1,2,3,4,5,6 0.0392 [3.99] 70.0064 [74.09] 76.16 [710.52]

0,1,2,3,4,5,6,7 0.0356 [3.35] 70.0060 [73.58] 75.92 [78.92]

0,1,2,3,4,5,6,7,8 0.0312 [2.90] 70.0054 [73.17] 75.79 [77.71]

0,1,2,3,4,5,6,7,8,9 0.0243 [2.02] 70.0040 [72.11] 76.07 [75.37]

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For event windows beginning the day of the announcement (i.e., day 0) we observe a

dramatically different effect. That is, we nd statistically signicant market reactions to the

undesirable events. While some differences exist across event windows starting the date of

the announcement, all 10 post-occurrence event windows share the common features thatd0is signicantly positive andd1 is signicantly negative, at above the 10% level. The mean

values ford0 andd1 for these post-announcement event windows are .0275 and7.0043,

respectively. The coefcient estimates (and their signicance) are generally increasing up

until event window day 0 through day 6. For this event window, the estimate value ford0 is

.0392 and ford1 is 7X0064, which are both signicant at above the 1% condence level.Then, consistent with greater noise in the analysis, the signicance of the results begins to

diminish for longer event windows.5

The signicant negative sign ford1 across the post-occurrence event windows provides

consistent support for the hypothesis that the stock market reaction of a celebrity

undesirable event is negatively related to blame. The estimated positive value for d0 (in

conjunction with the negative value for d1) indicates a positive stock market reaction for

low blame events versus a negative stock market reaction for high blame events.6

The estimated ratio ofd0ad1, which provides an indication of the level of blame wherethe stock market reaction transitions from positive to negative, is reported in Table 2. The

reported values indicate that cumulative abnormal return tends to be positive for events

viewed as not being highly blameworthy. For example, for event window day 0 through

day 6, the ratio of jd0ad1j is 6.16, with an estimated standard error of .59. This indicatesthat events with blame levels below (above) 6.16 tend to generate positive (negative)

abnormal returns. The average ratio of jd0ad1j for the 10 event windows beginning on day0 is 6.6. This indicates that events rated, for example, at or below the mean level ofblameworthiness tend to be associated with positive stock market return. Only those events

regarded as highly blameworthy tend to generate negative abnormal returns.

To more fully understand why we observed this differential market reaction to

undesirable events, we also surveyed our respondents regarding how much sympathy

there was for the person involved in the undesirable event. We measured sympathy on a

scale of one (1 there is low sympathy for the individual) to eight (8 there is highsympathy for the individual). We found that the blame and sympathy measures were very

5The fact that effects are strongest for event windows beyond the day of the event is consistent with additional

information about the event appearing in the media days after its initial disclosure. Our search of the LexisaNexisdatabase of newspapers indicated that the mean number of stories where the event was headlined was 16 on day 0,

39 on day 1, 17 on day 2, 14 on day 3, and 12 on day 4. This non-instantaneous response is consistent withprevious event studies (e.g., Mitchell's 1989 study of the market's response to the Tylenol poisonings). We do not

observe evidence indicating that the market over-reacts to the events and then ``bounces back,'' i.e., evidence

suggesting that these events are simply transitory with no long-run affect on rm value. This would be reected,

for example, by signicant abnormal returns near the event day that are counter balanced by signicant abnormal

returns of the opposite sign for subsequent event days.

6We also examined the mean cumulative abnormal return independent of blame and found it insignicantly

different from zero. This is consistent with our sample containing high blame events that are associated with

negative CAR and low blame events that are associated with positive CAR. By not accounting for this differential

response, the underlying relationship is obscured.


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highly correlated (7.96). This high correlation supports the view that high blame is

related to unsympathetic (unfavorable) perceptions, while low blame is related to

sympathetic (favorable) perceptions. Such judgments of the celebrity spokesperson, in

turn, inuence rm value. While high blame (i.e., low sympathy) events are associated

with negative stock return, low blame (i.e., high sympathy) events are associated with

positive stock return.

Sensitivity Analysis

We undertook a number of sensitivity checks and, in all instances, found results supportive

of our Table 2 ndings. For example, we also estimated Equation 1 based on an analysis of

the 128 individual stocks (i.e., portfolios were not formed for stocks having the same

calendar day for events).7 The results from this analysis were in close correspondence to

those we report. Further, we found no evidence that our results were sensitive to a

particular type of event (such as injuries), ``extreme'' stock return values (i.e., possible

outliers), whether the spokesperson was dropped following the undesirable event, co-

occuring events known to inuence stock price (such as earnings announcements), the

inclusion of additional explanatory variables (e.g., those measuring event severity or

interest), or potential non-linearities in the relationship.

Conclusion

Celebrity endorsers are often viewed as risky because of their potential for involvement in

undesirable events whose negative repercussions can transfer to the rm. Our results

suggest these concerns are most relevant for very high blame events. While very high

blame undesirable events inuence negatively rm value, low blame events actually

increase rm value.8 These ndings are consistent with low blame events promoting

sympathy, liking and visibility for the spokesperson, which is then transferred to the brand.

Conversely, high blame events tarnish the endorser and so the brand image.

We should note that our results should not be interpreted as implying that the image

of the rm is resistant to negative effects associated with a blameworthy spokesperson,

7Since spokespersons rarely serve as endorsers for rms in the same industry, one of the primary sources likely to

induce cross-correlated returns (i.e., an industry effect) does not arise in our sample. As such, ordinary least

squares estimation on individual stocks may be efcient (minimum variance).

8The favorable publicity generating aspect of undesirable events is not unknown to celebrities. Many have ``a

public persona'' that seeks controversy, and instances exist where celebrities have feigned undesirable events. For

example, one celebrity fabricated a story about being attacked by skinheads in order to increase visibility.

Individuals make choices on the appropriateness of behaviors that can generate sympathy, controversy andaorvisibility (consider, for example, Dennis Rodman and Madonna). Companies, in turn, make choices as to the

appropriateness of the individual as a potential spokesperson.

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or that managers need not be concerned about spokesperson behavior. The effect of an

undesirable event on rm value is not exogenous but rather is also inuenced by

actions the rm undertakes. Firms use ` damage control''such as terminating an

endorser contractto separate their image from a fallen celebrity. When Michael

Jackson was accused of child abuse, PepsiCo discontinued his advertisements in the

United States but retained his spots in Asia where he was still well liked. Our results

are supportive of the fact that rms have been able to take steps to minimize the

damage associated with a tarnished spokesperson.

Although our analysis helps to establish that endorser blameworthiness inuences rm

value, there are issues related to undesirable events that we have not focused upon in this

work. For example, we do not address circumstances when the nature of undesirable eventscorresponds poorly to brand attributes (e.g., when James Garner had a heart attack while

serving as the endorser for the Beef Industry Council). Since endorsers and brands should

have attributes that match (Kamins 1990), events creating these types of incongruities can

be particularly troublesome to the rm.

Also unexplored in this research are the attributions made about rms that have non-

contractual associations with tarnished celebrities. For example, anecdotal evidence

suggests that the voluntary as opposed to involuntary afliation with a celebrity endorser

can inuence how an event can affect rm image. After O.J. Simpson was accused of

murder, Hertz (a company that used him as a spokesperson) was picketed. Hertz responded

by pulling commercials featuring Simpson. In contrast, rms involuntarily associated with

Simpson beneted. Products ranging from Bruno Magli shoes to KC-45S knives saw

substantial increases in sales. Future research can investigate if rms involuntarilyassociated with a tarnished celebrity i) do not suffer from ``guilt by association'' even

for a highly blameworthy event, and ii) benet from the increased attention generated by

the incident.

Another area of study is the investigation of how different types of celebrities can

inuence the response to undesirable events. Although we set out to explore celebrity

endorsers in general, the majority of the sample and of the high blame observations

involved athletes. It is possible that sports fans, the likely target audience for

companies hiring athletic endorsers, give professional athletes a hero status. For

example, fans may have a relatively high tolerance for their favorite athlete's blame-

worthy actions. Future research can study potential differential effects associated with

different categories of celebrity.

The effectiveness of an endorser will depend jointly on awareness of and attitudes

towards the celebrity. For low culpability events, we nd that the increased visibilitygenerated by an undesirable event enhances an endorser's effectiveness. The prototypical

example involves Nancy Kerrigan. Following her attack, Kerrigan became (at least

temporarily) one of the most well known people in America. This was clearly benecial

to brands she endorsed. Conversely, for high culpability incidents the visibility generated

by an event will make a spokesperson less effective. The fact that this adverse effect on

rm value tends to be the exception rather than the rule attests to the favorable potential of

undesirable events. All is not lost and, in fact, much can be gained when bad things happen

to endorsers of good products.


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Endorser 1