Movie Advertising And The Stock Market Valuation Of Studios
Major studios typically launch fewer than twenty motion pictures per year, so the financial performance of a single movie release can have a major effect on the studio's profitability. The Efficient Capital Markets hypothesis posits that the stock market would recognize such an impact. In this paper Authors study how single movie releases impact the investor valuation of the distributor. they analyze the change in post-launch stock price of a movie, and predict the direction and magnitude of excess returns based on the expectation built up for that movie. That expectation is set, in part, by media support, i.e. highly advertised movies are expected to draw larger audiences than others.