Shareholders of Nike, Gatorade and other Tiger Woods sponsors lost a collective $5 to $12 billion in the wake of the scandal involving his extramarital affairs, according to a new study by researchers at the University of California, Davis.
The losses are separate from “and potentially much larger than damage to Woods” own earnings.
“Total shareholder losses may exceed several decades worth of Tiger Woods' personal endorsement income,” said Victor Stango, a professor of economics at the UC Davis Graduate School of Management and co-author of the study, in a statement.
With fellow UC Davis economics professor Christopher Knittel, Stango looked at stock market returns for the 13 trading days that fell between Nov. 27, the date of the car crash that ignited the Woods' scandal, and Dec. 17, a week after the golf great announced his indefinite leave from the sport.
To assess shareholder losses, the economists compared returns for Woods' sponsors during this period to those of both the total stock market and of each sponsor's closest competitor.
Knittel and Stango also reviewed returns for four years before the car accident to determine how each sponsor's market performance normally correlates with that of the total market and of competitor firms.
The study focused on nine sponsors for which stock prices are available: Accenture; American Express; AT&T Tiger Woods PGA Tour Golf (Electronic Arts); Gillette (Proctor and Gamble); Nike; Gatorade (PepsiCo); TLC Laser Eye Centers; and Golf Digest (News Corp.).
Overall, Knittel and Stango concluded that the scandal reduced shareholder value in the sponsor companies by 2.3 percent, or about $12 billion.
