“The Value of Affiliations with Celebrities: Evidence from Firm Visits by The President of The United States” by Dr. Douglas A. Schuler
Management and Strategy Seminar
Dr. Douglas A. Schuler
Associate Professor of Business and Public Policy
Jesse H. Jones Graduate School of Business
Current research suggests that external audiences value firms’ affiliations with celebrities. We add to theory by suggesting that the value of celebrity affiliations depends on the dimensions of likability and credibility. We test these two dimensions in the context of firms’ affiliations with a unique celebrity, the President of the United States. Considering visits to 77 companies by four U.S. Presidents from 1989 through 2013 and using a propensity score matching method to construct an ultimate sample of 298 firm visits, we find that shareholders positively valued firms’ celebrity affiliations through such visits. In addition, we demonstrate that the positive reactions are not due to the President’s likability, but rather his credibility. These results are corroborated in the President’s public remarks given during these visits, as shareholders rewarded the President’s credible commitments to deliver favorable policy for the industry but were indifferent towards his specific praise of the hosting firm. Overall, our study contributes to the celebrity literature by explicating the relative importance of celebrity credibility versus likability and the frames invoked by celebrities during public encounters with firms. We also contribute to the corporate political activity literature by demonstrating the value of firms’ affiliation with the President.