Business & Government

Investors Are More Loyal To — And Buy More From — Brands Whose Stocks They Own

A new Texas A&M study found that stock ownership drives day-to-day spending.
By Ann Kellett, Texas A&M University Division of Marketing & Communications March 9, 2021

a digital screen showing the prices of stocks
Research shows that consumers are more likely to invest in brands whose stock they own.

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For the first time, researchers have identified a direct link between the stocks people buy and the products they purchase.

“Before now, the prevailing wisdom was that investments affect consumption only through their effect on wealth, and not through an effect on investors’ emotions,” said Paolina Medina, an assistant professor of finance with Mays Business School at Texas A&M University.

For the study, recently published in the journal of the National Bureau of Economic Research, Medina and colleagues from Columbia University — Michaela Page, an associate professor of business, and Vrinda Mittal, a doctoral student — used data from an app called Bumped.

The app rewards customers who purchase items from several retail brands and stores by opening a brokerage account for them and giving them stock in those brands. Medina and her colleagues found that customers increased their spending for these brands after receiving these rewards.

“We found that ownership of specific stocks triggers feelings of loyalty that lead individuals to consume more from those brands, complementing previous findings that individuals also invest in brands they know and like,” Medina said.

The customers in the study increased their weekly spending for the selected brands by 40 percent, or about $23 each week, and this increase continued for three to six months. In addition, when Bumped provided app users with $5 or $10 in stocks from popular companies like Red Robin, McDonald’s, ExxonMobil, Chevron and Yum! Brands (which includes KFC, Pizza Hut and Taco Bell), all users purchased goods from those brands in the weeks that followed.

“In short, this means that consumers are more likely not only to invest in stocks from brands they care about, but are also more likely to purchase the products of firms whose stock they own,” Medina said.

For companies, this feedback effect could lead to increased value, according to Medina.

“Previous research has found that brand loyalty reduces a company’s cash flow volatility, which makes it financial healthier,” Medina said. “One can be loyal to a brand and spend on it for many reasons — the product fit your needs, you agree with the company’s philosophy, etc. But we didn’t know that owning stock of a company was also going to trigger loyalty and spending, and thus also contribute to more stable cash flows. ”

Media contact: Blake Parrish, 979-845-0193,

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