Several weeks ago, I mentioned that one assignment in our accounting policy and research class is an event study. Our class was split into groups of four, and each group was asked to choose an event and perform a study to determine whether that event affected specific firms’ stock prices. My group chose to study Super Bowl advertisements. Companies spend millions of dollars for a thirty-second slot during this huge game to tell viewers that they have a great product or potentially have a new product to unveil. If investors in these firms believe that these ads do their job by boosting future sales, the stock price of these firms should increase right after the Super Bowl. Not only should they increase, but there should be some portion of that return that is abnormal, or unrelated to the market.
So, if investors in Anheuser-Busch saw the commercial below, do you think the firm would have significantly positive abnormal returns a few days after the Super Bowl?
It turns out they do! I won’t get into any of the technical portions of this study, but we did find results that proved our hypothesis. We also expanded our study to look at firms that were advertising for the first time in the Super Bowl to see if their returns were even higher. We believed there was more of an element of surprise for these companies, and the ads possibly contained more information than ads of firms that always advertise in the Super Bowl. Lastly, we broke our group of ads into good and bad ads based on USA Today ratings. It would seem that good ads would have more positive returns than poorly ranked ads. We received mixed results for our last tests, but I was really happy with our results overall.
This course, along with many others in the Fisher MAcc program, go beyond lectures and readings to allow students to get their hands dirty. In this course, we didn’t just read research papers, discuss and then forget them. We built an understanding of the research process that helped us conduct our own study and present it like many academic researchers. In fraudulent financial reporting, we don’t just talk about hypothetical situations and different methods of fraud. We actually are able to examine all different types of financial data from a sample of firms and investigate the fraud ourselves. These hands-on learning experiences are very valuable and helpful in making the class more meaningful.
With that, we start our last week of Spring Term 1 with finals just around the corner! To all of my classmates – hang in there, it’s almost spring break!!