Haibing Gao

Ph.D. candidate named finalist for marketing organization’s award

GAINESVILLE, Fla. – Haibing Gao, a fifth-year Ph.D. candidate in the Department of Marketing, has been selected as one of three finalists for the 2015 Mary Kay/Academy of Marketing Science Dissertation Proposal Competition.

The winner will be announced at AMS’s Annual Conference on May 12-14 in Denver.

To be eligible, candidates must have completed a successful proposal defense within the 2014 calendar year. Gao is scheduled to complete his degree in summer 2015.

Gao’s dissertation research explores how pre-recall advertising may affect potential negative impacts of product recalls on the stock market. He analyzed automakers’ stock prices after 110 recall announcements from 2005-2012, and found that firms anticipating a recall announcement should consider the seriousness of the defect and novelty of the product when deciding whether to increase or decrease advertising. For recalls that would cause minor harm to new products, automakers should increase pre-recall advertising to minimize damage to the firm’s value. For recalls that would cause major harm to older models, Gao recommends pre-recall advertising should be held constant or reduced.

Gao uncovered two primary effects. First, in cases of minor recalls of new models, he found that a steep increase in pre-recall advertising raises the automaker’s abnormal stock returns. Gao calls this a “signaling effect,” where because investors have less prior information about new models, an increase in pre-recall advertising can underscore the fact that the hazard is not very serious. Second, when analyzing major recalls of older models, Gao found the opposite effect. He said increasing advertising expenditures prior to announcing the recall worsens the automaker’s abnormal returns. Gao calls this an “expectations effect,” where the increase in advertising increases investors’ expectations of good performance in the future, which are then disappointed when recalls occur.

Gao’s research interests include marketing-finance interface and consumer social interaction. He earned a master’s degree in Statistics from UF in 2010 and a master’s degree in Operations Research from Rensselaer Polytechnic Institute.