Project Examines Whether Stock Activity Can Predict the Future
By Jill Gambon
If auto industry executives had a tool that could predict the success of future products, would there be more bestselling cars like the Camry and fewer flops like the Edsel?
Manning School of Business Asst. Prof. Berk Talay is researching the possible existence of such a tool, thanks to a recent Joseph P. Healey Advancing Research, Scholarship and Creative Work Seed Grant.
“We want to give managers and the entire public an easy and yet valuable tool to predict the future,” he says. “That tool is the stock market.”
Talay is researching the relationship between public companies’ marketing activities and subsequent stock market reaction to see whether investors’ response is a reliable indicator of the product’s success. If a connection is established, businesses could use the insight gleaned from the stock market reaction to shape their marketing plans, he says.
If, for instance, a carmaker’s stock price dips after announcing plans for a new model – information that is usually released 18 months ahead of the cars being available in dealers’ showrooms – then company executives could make adjustments to their marketing strategy. The company could reconsider the car’s launch date or make other changes to improve its chances for success, Talay says.
For consumers, such insight could lead to more informed decision-making when it comes to one of the biggest purchases they’ll ever make, Talay says.
Talay is planning to research data from the auto, pharmaceutical and at least one other industry. He has presented preliminary findings to his MSB colleagues and is continuing to collect and analyze data. He expects to wrap up the project by June 2013.