According to this story at the New York Daily News, the recent revelation about Tiger Woods' sexcapades and imploding domestic life may have cost shareholders upwards of $12 billion according to this academic dude. This is not chump change. I have not seen the actually study, and putting aside the fact that I think there could be multiple factors at play regarding these pricing declines, this raises a raft of interesting questions.
Before attending business school and subsequent to my current exile, the werewolf spent three years as an insurance broker in his former life. I specialized in professional liabilities, including Directors and Officers liability, among other things. Here's a question to all of my litigation loving lawyer friends out there. Based on this information, can shareholders wage a legitimate claim against the D's and O's of one of Tiger's sponsoring companies linked to this decline? My answer at the moment would be, it depends.
Several publicly traded companies invested themselves very heavily in the Tiger Woods brand. The worst example, and ripest for a D&O claim methinks, was Gatorade and their strange decision to replace of their primary sports drink with a specialty branded sports drink named Tiger. Given that Gatorade is the original sports drink and the godfather of that consumer segment, the decision was ill-conceived from the get go, and, I think independent of Tiger's indiscretion, it was a bad move for the company because it diluted their core product brand and they heinously mismanaged the advertising and branding for the Tiger drink. Still, tying your company's storied primary product that has its own core following and a well defined place in the consumer's mind to a fallible human, and naming it after him, is sheer idiocy. The product wasn't performing well before Tiger's brand equity tanked with his sexplosion, and the irony is, that Tiger's fall from grace may have provided Gatorade with the cover they needed to pull the drink.
Accenture's value has weathered the Tiger storm without any noticeable loss(Although one wonders how long it will before the whiplash of the current economic environment impacts their bottom line). Accenture's insulation can be attributed to the fact that they offer professional services to corporations and have no contact with the product consuming public, and that their whole Tiger associated advertising campaign was an attempt to simply raise the company's profile and brand awareness. I digress. The question looms, did Nike and Electronic Arts screw the pooch by tying extensive portions of their product lines to Tiger? Should they have performed due-diligence on his background as part of their fiduciary responsibility to the shareholders to safeguard against an event like this?
Finally, does the $12 billion in evaporated shareholder equity make Tiger an enemy of the people?