Michelle Obama creates an unprecedented amount of value for the companies that make and sell the clothes she wears. HBR spoke to Yermack to find out why.
The effect of Obama’s fashion choices on stock prices is huge. But is it causation or correlation?
The stock price gains of the companies whose clothes she wore in public appearances—29 brands in all—are cumulative abnormal returns. That is, the returns cannot be attributed to normal market variations.
Is the effect temporary?
The stock price gains persist days after the outfit is worn and in some cases even trend slightly higher three weeks later. Some companies that sell clothes that Obama frequently wears, such as Saks, have realized long-term gains. Her husband’s approval rating appears to have no effect on the returns.