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Likable Super Bowl ads can boost stock prices, <br /> Cornell and Buffalo researchers find

Commercials that TV viewers like during the Super Bowl can stimulate a rise in stock prices, according to a study by Cornell and University of Buffalo (UB) researchers.

The findings, reported in a Jan. 31 Science Daily article online, stem from a study by Charles Chang, assistant professor of finance in Cornell's School of Hotel Administration; Kenneth A. Kim of UB's School of Management; and Jing Jiang, a UB doctoral student.

The researchers studied 529 commercials that aired during 17 Super Bowls (from 1989-2005) and used ratings from USA Today's Ad Meter, which ranks real-time consumer likability. They found that companies with the most likable commercials showed increases in stock purchases on the days following the Super Bowl. These purchases in turn increased the firms' stock price.

Companies with the least likable ads and those receiving a neutral response had no effect on on stock prices.

Kim explained that the reaction to ads demonstrates how people often take mental shortcuts instead of applying longer analytical processing; in this case, they relate only one aspect of a company to its expected investment returns. Such a shortcut is known as representativeness bias.

"We're probably all guilty of this bias in our everyday lives," Kim says in the article.

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