In December of 2009 marketers at Accenture, AT&T, Gatorade, General Motors, Gillette, Nike, TAG Heuer and other companies faced a difficult decision. After tabloid reports of infidelity and an alleged altercation with his wife that ended in a car crash, Tiger Woods — who had endorsement deals with those firms — publicly (if vaguely) apologised for his behaviour and announced that he was taking an indefinite leave from golf. The following days brought more salacious stories. Should the companies abandon Woods or stay the course? Over the next few weeks, investors in firms that used Woods in advertisements lost US$12 billion (NZ$18.3 billion) as share prices fell. For managers at those companies, the question became: How to mitigate the damage?
Previous research has shown that firms tend to suffer financially when a celebrity endorser becomes mired in scandal. But the…