During the week before New Year's, a notoriously slow time for news, two UC Davis professors caused an international media sensation. They released a study saying the Tiger Woods scandal cost his corporate sponsors' stocks to drop a combined $12 billion in the weeks after the scandal hit the news. (You can find our story on the study by clicking here.)
Now the study is getting picked apart. Notably, a column by Carl Bialik, the Wall Street Journal's "Numbers Guy," takes issue with the professors' methodology and findings. Here's a link to his column, which ran in Thursday's Journal.
Bialik wrote that it's practically impossible to blame a specific event for the fluctuation in a stock.
Among his concerns: The study overlooked the fact that one of Woods' sponsors - PepsiCo, which owns Gatorade - issued a negative profit and revenue forecast a couple of weeks after the Woods scandal broke. Bialik argues that PepsiCo's forecast may have skewed the entire results.
Interestingly, the professors, Victor Stango and Chris Knittel, quietly released a revised version of the study earlier this week in which they mention the PepsiCo forecast and make a few other clarifications. But they say the PepsiCo forecast doesn't undermine their central thesis. We should point out that the new study was released before the Journal published its column.
You can find the new Stango-Knittel study here.
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