Stephen W. Pruitt

Executive Ownership, Corporate Value, and Executive Compensation: A Unifying Framework

This study presents an integrated investigation into the factors affecting executive ownership, the market value of the finn, and executive compensation by explicitly incorporating the simultaneity of the process determining these variables into the empirical estimation, Overall, the results of the study support the notion that a finns market value, executive stock ownership, and executive compensation are jointly determined. Further, the findings suggest that executive stock ownership and executive compensation may serve as a type of bond by which top executives are induced to act in the best interests of shareholders, The study also finds that a finns q ratio and an executives job-specific experience (as well as finn size) are important determinants of executive compensation. This result is generally consistent with the view that the firm optimally establishes its managerial compensation plan in response to both its operating environment and the specific personal characteristics of its chief executive(s).

Corporate Stadium Sponsorships, Signaling Theory, Agency Conflicts, and Shareholder Wealth

ABSTRACT Contrary to the plethora of critical articles recently appearing in both the popular and business press, this carefully controlled investigation of 49 stadium-and arena-naming-rights agreement announcements provides striking evidence that such sponsorships can significantly enhance the stock prices of sponsoring companies. Inded, the results of the study show that the average staium sponsors stock prices increased by 1.65 percent at the time of announcement of the programs - a result considerable in excess of the returns associated with other major marketing programs such as the signing of Olympic sponsorships and celebrity endorsers. A multiple regression analysis employing firm-specific changes in stock prices as the dependent variable and quantifiable corporate and sponsorship-related atributes as independent variables is also presented. Variables positively and significantly correlated with perceived sponsorship success include team-winning percentages, contract length, and high technology and locally based companies. Overall, the findings of the study are consistent with the novel hypothesis that, for some firms, the real value-added of a stadium sponsorship may lie in its ability to serve as an effective or ‘honest’ signal of managerial confidence in the future of the company.

The Value of Winning in Motorsports: Sponsorship-linked Marketing

ABSTRACT Corporate sponsorship of events, especially sports, has become a commonplace marketing communications tool. Still at question in sponsorship-linked marketing programs is the economic value of the firm. Also largely unexamined in marketing research on sponsorship is the impact of participation outcomes. For example, is it more valuable to the firm to sponsor a winner, or is it simply participation and, thus, exposure that brings value to the firm? This study presents an analysis of the share-price impact of sponsoring the drivers in the Indianapolis 500 mile race to assess the value of motorsports victories and participation within a firms sponsorship-linked marketing strategy. This approach allows the use of historical data in the analysis of the value of sponsorship. While the findings of the study suggest that autoracing sponsorships involving products that are not closely linked to the automotive industry probably offer little chance for increasing overall corporate valuations, sponsors with logical or matched ties to the consumer automotive industry registered statistically and economically significant gains in their share prices around the time of their sponsorship victories. ‘Win on Sunday, Sell on Monday-an old adage founded by Detroits automakers, which has withstood the racing test of time. -Economaki, 1997

The Relationship Between Major-League Sports' Official Sponsorship Announcements and the Stock Prices of Sponsoring Firms

This study presents analysis of the impact of “official product” sports sponsorships with the National Football League (NFL), Major League Baseball (MLB), the National Hockey League (NHL), the National Basketball Association (NBA), and the Professional Golfers Association (PGA) on the stock prices of sponsoring firms. The primary finding of the study is that, in the main, announcements were accompanied by increases in shareholder wealth. The 53 sponsors analyzed experienced mean increases in stock valuations of about

The NASCAR Phenomenon: Auto Racing Sponsorships and Shareholder Wealth

257 million. A multiple regression analysis of firm-specific stock price changes and selected corporate and sponsorship attributes indicates that official product sponsorships with the NBA, NHL, and PGA and those with smaller market shares were associated with the largest gains in share prices. Although corporate cashflow (a proxy for agency conflicts) is statistically unrelated to shareholder approval, sponsorships by high-technology companies were associated with stronger stock price reactions than otherwise. Finally, product congruence with the sponsored sport was positively related to changes in stock prices.

The Impact of the Reduction in Tick Increments in Major U.S. Markets on Spreads, Depth, and Volatility

ABSTRACT This study presents the first analysis of the impact of NASCAR sponsorship announcements on the stock prices of sponsoring firms. The primary finding of the study--that NASCAR sponsorship announcements were accompanied by the largest increases in shareholder wealth ever recorded in the marketing literature in response to a voluntary marketing program--represents a striking and unambiguous stock market endorsement of the sponsorships. Indeed, the 24 sponsors analyzed in this study experienced mean increases in shareholder wealth of over

The CRISMA Trading System: The Next Five Years

300 million dollars, net of all of the costs associated with the sponsorships. A multiple regression analysis of firm-specific stock price changes and select corporate and sponsorship attributes indicates that NASCAR sponsorships with more successful racing teams, corporate (as opposed to product or divisional) sponsorships, and sponsorships with direct ties to the consumer automotive industry are all positively correlated with perceived sponsorship success, while corporate cash flow per share (a well-known proxy for agency conflicts within the firm) is negatively related with shareholder approval.

TOUCHED BY TRAGEDY: CAPITAL MARKET LESSONS FROM THE CRASH OF VALUJET FLIGHT 592.

This study presents an analysis of the impact of the introduction of quotes in sixteenths of a dollar on the AMEX, Nasdaq, and NYSE in mid-1997 on select market characteristics such as spreads, effective spreads, quoted depth, and volume. The findings of the study document reductions in the bid-ask spread, effective spread, and a statistically significant increase in the number of quotes. Interestingly, we find that liquidity, as measured by the total depth at the bid and ask, declines significantly on the AMEX and NYSE, but increases on the Nasdaq. Trading volume increases on the NYSE, but remains unchanged for the AMEX and Nasdaq. We also find that the proportion of even-increment quotes is a relevant factor affecting percentage spreads for Nasdaq both before and after and for the NYSE only after the change in quoting increments.

The effect of media presentation on the formation of economic expectations: Some initial evidence

University of North Florida. n two articles published in this Journal, Pruitt and White [1988 and 19891 demonstrate the returns that would have accrued to stock and I options traders following a conn?lex technical rule known as the CRISMA (Cumulative Volume, RelatIve Strength, Moving Average) trading system between January 1976 and December 1985. Judging by the volume of mail and telephone calls we have received, a number of professional managers and individual investors have considerable and continuing interest in CRISMA’s prediction of 6.13% to 35.65% risk-adjusted stock returns and 12.05% to 28.72% round-trip options yields. As Fama [1970] and numerous other researchers note, however, there are many trading rules that appear highly profitable on a given data set only to fail when subjected to tests with additional information. Accordingly, the purpose of this study is to update the findings of the original CRISMA papers using data unavailable at the time of preparation of the original articles. We believe a finding of continued success for the CRISMA system would provide important and convincing new evidence concerning the (in)efficiency of the securities markets and of the ability of investors to “beat the market” by employing complex technical trading strategies.

Healthy eating decisions require efficient dietary self-control in children: A mouse-tracking food decision study

Abstract This study presents an event—time analysis of the effects of the crash of ValueJet Flight 592, the mandated F.A.A. shutdown of ValuJet, and the subsequent restart of the airline on ValuJet shareholders and two portfolios composed of the stocks of major and “low cost” competitors. The results of the study document immense losses for ValuJets shareholders, as well as large “contagion” losses for the holders of other “low cost” airlines, but statistically significant gains for the owners of major airline stocks. A cross-sectional analysis of the abnormal returns registered at the time of the crash and shutdown suggests that fleet age and “low cost” status, but not an airlines public safety record, were significant of the determinants changes in share prices for competitor firms.