Attracting investor attention through advertising

Lou, Dong ORCID: 0000-0002-5623-4338 (2013) Attracting investor attention through advertising. . London School of Economics and Political Science, London, UK.

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Abstract

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. Next, 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:	Monograph (Working Paper)
Official URL:	http://www.lse.ac.uk/
Additional Information:	© 2013 The Author
Divisions:	Finance
Subjects:	H Social Sciences > HG Finance
JEL classification:	G - Financial Economics > G1 - General Financial Markets > G12 - Asset Pricing; Trading volume; Bond Interest Rates G - Financial Economics > G1 - General Financial Markets > G14 - Information and Market Efficiency; Event Studies
Date Deposited:	15 Nov 2013 12:50
Last Modified:	11 Dec 2024 19:11
URI:	http://eprints.lse.ac.uk/id/eprint/54382

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