Lou, Dong (2009) Attracting investor attention through advertising. Discussion paper, 644. Financial Markets Group, London School of Economics and Political Science, London, UK.
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This paper provides empirical evidence that managers adjust firm advertising expenditures to influence investor behavior and short-term stock prices. First, this paper shows that increased advertising spending is associated with individual investor buying and a contemporaneous rise in abnormal stock returns, which is then reversed in subsequent years. Second, there is a significant rise in firm advertising expenditures prior to insider sales and seasoned equity offerings. This large increase is followed by a significant decrease in advertising expenditures in the subsequent year. This pattern of advertising expenditures is consistent with the idea that managers are exploiting the return effect induced by advertising to the benefit of the existing shareholders and/or themselves.
|Item Type:||Monograph (Discussion Paper)|
|Additional Information:||© 2009 The author|
|Library of Congress subject classification:||H Social Sciences > HG Finance
H Social Sciences > HB Economic Theory
|Journal of Economic Literature Classification System:||G - Financial Economics > G3 - Corporate Finance and Governance > G30 - General|
|Sets:||Departments > Finance
Collections > Economists Online
Research centres and groups > Financial Markets Group (FMG)
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