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Attracting investor attention through advertising

Lou, Dong (2013) Attracting investor attention through advertising. The London School of Economics and Political Science, London, UK.

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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:
Additional Information: © 2013 The Author
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
Sets: Departments > Finance
Collections > Economists Online
Date Deposited: 15 Nov 2013 12:50
Last Modified: 15 Nov 2013 12:55

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