Vision Statement: How This First Lady Moves Markets David Yermack and Open

Michelle Obama creates an unprecedented amount of value for the companies that make and sell the clothes she wears.

The effect of Obama’s fashion choices on stock prices is huge. But is it causation or correlation?

The stock price gains of the companies whose clothes she wore in public appearances—29 brands in all—are cumulative abnormal returns. That is, the returns cannot be attributed to normal market variations.

Is the effect temporary?

The stock price gains persist days after the outfit is worn and in some cases even trend slightly higher three weeks later. Some companies that sell clothes that Obama frequently wears, such as Saks, have realized long-term gains. Her husband’s approval rating appears to have no effect on the returns.

How do the returns compare with those generated by other brand endorsers?

Few models or celebrities make the kind of impact on company stock price that Michelle Obama does. The First Lady’s astonishing influence may be tied to the fact that consumers know she’s not paid to wear what she does, whereas they may subconsciously discount models’ endorsements as inherently corrupt.

Have all First Ladies had this effect?

No. Even fashion icons such as France’s Carla Bruni-Sarkozy do not. Bruni-Sarkozy, like many First Ladies, dresses mainly in one brand: Dior. Obama mixes couture with items anyone can buy at a mall—she famously wore J. Crew gloves while holding the Lincoln Bible at the Inauguration. Consumers flock to the stores, and even if they don’t buy what she wears, they often leave with something else.

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