Part C – application question 8.25
The behaviour of the former CEO of David Jones apparently did not impact the company’s share price. However, according to a study by two American economists, the transgressions of Tiger Woods were responsible for wiping up to $US12 million off the value of his sponsors (Gatorade, Nike, Gillette, Electronic Arts). Gatorade and Nike were the worst hit of his sponsors.
(a) How can this apparent contraction between the impact of David Jones’ CEO and Tiger Woods be explained?
(b) What does the impact on sponsors’ shares say about the adage that ‘any publicity is good publicity’?