Review of Financial Studies Vol. 27 No. 6 2014
Attracting Investor Attention through Advertising
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. 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. © The Author 2014.
- DOI
- 10.1093/rfs/hhu019
- Volume
- 27
- Issue
- 6
- Pages
- 1797-1829
- Language
- en
- Sources
- openalex crossref