One of my favorite courses that I have taken since starting the MAcc program at Ohio State has been Accounting Policy and Research with Professor Zach. He always finds ways to make class exciting and has a knack for simplifying complex topics.
The class primarily consists of reading research papers related to accounting topics and writing abstracts about their core content. In addition, the students were assigned into groups of four and given the task of conducting their own research project in the form of an event study. An event study is a methodology for measuring the impact of an event on the price of a stock. My group decided to analyze whether a successful opening weekend of a blockbuster film had an impact on the price of the stock of the production company. We defined a successful weekend as a movie reeling in $70 million dollars or more.
Our results were really interesting. It turns out that, in general, prices actually go down following a major success at the box office. How can this be? We hypothesized that production companies are only a minor component of much larger entities and so despite $70 million seeming like a large sum, in reality it is small fries for the parent company. In addition, we contended that investors may be overconfident in the future success of a movie. As a result, stock prices may be inflated due to unrealistic expectations for the movie’s success prior to its release. Therefore, even a “successful” weekend may lead to a decrease in price.
This was a great experience and opened my doors to the world of practicing accounting research. While this was a very minor first step, it was certainly an invaluable experience and something I know I wouldn’t have had the chance to do outside of Ohio State.