How does box office failures impact stock price of U.S. movie studios

Abstract

The thesis investigates the question of impact on a poor box office on the stock price of a studio by realizing a time event analysis of cumulative abnormal return of a specific studio stock price over 8 unprofitable and 8 profitable movie releases. Results show a lack of short-term correlation between box office performance and abnormal return and a negligible correlation over a ten-day period. Hypotheses regarding those results are data contamination, lack of importance of the release itself and the need to consider an expectation factor regarding the movies. The author concludes by stating that the impact of box office failures is not measurable yet on the stock price but is still worrying in today’s economy. Further recommendations are also discussed in order to obtain more relevant results such as an improved quantitative approach or a qualitative one.