Academy Awards and Stock Returns

Abstract

This study examines the effect the Academy Award nominations and wins have on stock returns of the producing movie studios. The Academy Awards, or the Oscars, is an award ceremony where films and filmmakers are recognized annually. The Oscars are considered as the most important awards in the film industry.

Theoretical background covers theories from Behavioral Finance and the Efficient Market Theory. There is not previous literature on this specific subject, where the effect of the Academy Awards on stock returns is studied. However, many studies have examined the relationship the Academy Awards have on box office revenues of nominated and awarded movies. These studies have found that an Academy Award nomination and win generate substantial extra revenues. Nominations seem to have larger impact than wins.

The data is collected for the past 31 Academy Award nominations and award ceremonies from 1986 to 2016. Therefore, stock market data for the study covers the period of 1985-2016. Using event study methodology, the effect Oscar nominations and wins have on stock returns of the distributing firm, are examined. The event studies include the six main categories: Best Picture, Actor in a Leading Role, Actress in a Leading Role, Actor in a Supporting Role, Actress in a Supporting Role and Directing. After completing the research, none of the results from the study are statistically significant. Based on the results, an Academy Award nomination or win does not affect stock returns.