Did Tiger Cost Shareholders $12 Billion?

While Tiger Woods may be wondering what a divorce would cost him personally, shareholders in companies he endorses are already stinging from losses many times the golfer's net worth. At least that's what a new university study says.

Tiger Woods
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Tiger Woods

Shareholders of Woods' sponsors lost up to $12 billion in the wake of the scandal involving his extramarital affairs, according to a study by researchers at the University of California, Davis.

"Total shareholder losses may exceed several decades' worth of Tiger Woods' personal endorsement income," Victor Stango, a professor of economics at the UC Davis Graduate School of Management and co-author of the study, said in a statement.

Stango, together with co-author UC Davis economics professor Christopher Knittel, looked at stock market returns for the 13 trading days between November 27, when the car crash that ignited the Woods' scandal happened, and December 17, a week after the golfer announced his indefinite leave from the sport.

For the study, they compared returns for Woods' sponsors during this period with those of the total stock market and of each sponsor's closest competitor.

The two economists 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.

Naturally, many other factors could also affect trading at that time.

The study includes eight listed sponsors: Accenture, AT&T, Tiger Woods PGA Tour Golf (Electronic Arts), Gillette (Procter and Gamble), Nike, Gatorade (PepsiCo), TLC Laser Eye Centers and Golf Digest (Conde Nast).

Knittel and Stango concluded that the scandal reduced shareholder value in the sponsor companies by 2.3 percent, or about $12 billion.

Investors in the three sports-related companies (Tiger Woods PGA Tour Golf, Gatorade, and Nike) fared the worst, according to the study, which showed that they experienced a 4.3 percent drop in stock value in the aftermath of the scandal, equivalent to about $6 billion.

On the other hand, Accenture, a global management consulting firm, experienced no ill effects following the accident, the study claimed.

The pace of losses had slowed by December 11, when Woods announced his leave from golf. But as late as December 17, shareholders had yet to reverse their losses, the study also said.