Director’s Cut

Study Co-Authored by Abraham Ravid Highlights Impact of Directors on Movies’ Financial and Critical Success

Film studios looking to strike gold with their next release should worry less about signing A-list actors and more about landing a proven director, according to new research conducted by Dr. S. Abraham Ravid, professor of finance at Yeshiva University’s Sy Syms School of Business.

Sy Syms Professor of Finance S. Abraham Ravid coauthored the study

“Experienced directors, who have survived Hollywood because of their skills and success, have a large, measureable effect on the financial and critical success of every film they make,” said Ravid. “It’s much more important to choose the director than the star.”

Ravid’s study, conducted in collaboration with Kose John of New York University and Jayanthi Sunder of the University of Arizona, shows that directors are drivers of both financial value and esthetic success of movies. Using a unique hand-collected data set that covers the entire career path of all film directors who directed their first film in 1985-86, Ravid’s work follows the directors for 25 years. In addition to finding that experienced directors can have a crucial, positive impact on the financial and critical success of their film project (as opposed to stars, who had no demonstrated impact in a previous study conducted by Ravid), his findings disprove the popular Hollywood adage that directors are only as good as their last movie.

“If your first film flops, you’re out of the game because that’s all the information people have,” said Ravid. “But later in your career, we find that you’re judged on your average success. Woody Allen, one of the most prolific directors, had some movies that did better financially than others, but he could keep doing them because of his track record—it’s a rational market.”

Ravid wasn’t surprised that having a Martin Scorsese or David O. Russell attached to a film upped it chance of cashing in at the box office, but he did find it strange that the Brad Pitts and George Clooneys of Hollywood made no measurable impact. “It seems to me that the real question is not why directors influence the financial success of the film, but why stars don’t,” Ravid said. He noted that there are many complicating factors that make it more difficult to calculate the statistical effect of an actor on a film than a director. “It isn’t so much that stars are bad for films, but they are unpredictable,” he said. “With directors, that’s not the case. You know a good director will positively influence the film.”

The study, which is believed to be the first economic analysis of this topic, also found that on average, directors’ careers tend to be short and difficult. Directors whose first movies fail typically never direct again and most of the sample directors didn’t direct more than two movies. Furthermore, the study found some support for the claim that Hollywood is ageist. “Age works against you,” Ravid said. “Controlling for ability, older directors are hired less often.”

Titled “Performance and Managerial Turnover:  Evidence from the Career Paths of Film Directors,” Ravid’s research will be published in the Journal of Corporate Finance in 2015 and hangs together with current literature on the impact of CEOS and project managers on the success of their firms and projects. Ravid is also currently studying how Internet user reviews and professional critical reviews affect movie profitability and of the impact of movie ads on film revenue.

Ravid’s earlier published studies have focused on the most important factors determining movie profitability, on movies financing arrangements, on critical reviews, on the viability of violent movies, and on the correlation of the opening date of movies to stock market value.