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Attracting investor attention through advertising

Lou, Dong ORCID: 0000-0002-5623-4338 (2014) Attracting investor attention through advertising. Review of Financial Studies, 27 (6). 1797 - 1829. ISSN 0893-9454

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Identification Number: 10.1093/rfs/hhu019


This paper provides evidence that managers adjust firm advertising, in part, to attract investor attention and influence short-term stock returns. First, I show that increased advertising spending is associated with a contemporaneous rise in retail buying and abnormal stock returns, and is followed by lower future returns. Second, I document a significant increase in advertising spending prior to insider sales and a significant decrease in the subsequent year. Additional analyses suggest that the inverted V-shaped pattern in advertising spending around insider sales is most consistent with managers' opportunistically adjusting firm advertising to exploit the temporary return effect to their own benefit.

Item Type: Article
Official URL:
Additional Information: © The Author and Oxford University Press
Divisions: Finance
Subjects: H Social Sciences > HG Finance
H Social Sciences > HB Economic Theory
JEL classification: G - Financial Economics > G3 - Corporate Finance and Governance > G30 - General
Date Deposited: 23 May 2014 13:13
Last Modified: 20 Oct 2021 23:13

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