Lou, Dong 
ORCID: 0000-0002-5623-4338
(2009)
Attracting investor attention through advertising.
Financial Markets Group Discussion Papers (644).
Financial Markets Group, The London School of Economics and Political Science, London, UK.
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Abstract
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) |
|---|---|
| Official URL: | https://www.fmg.ac.uk/ |
| Additional Information: | © 2009 The Author |
| Divisions: | Finance Financial Markets Group |
| 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: | 09 Sep 2010 15:29 |
| Last Modified: | 15 Sep 2023 23:17 |
| URI: | http://eprints.lse.ac.uk/id/eprint/29311 |
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