Attracting Investor Attention through Advertising

• 成果类型: Article
• 署名作者: Lou, Dong
• 署名单位: University of London; London School Economics & Political Science
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhu019
• 发表日期: 2014
• 页码: 1797
• 关键词: earnings management; cross-section; STOCK; MARKET; price; performance; EXERCISES; BEHAVIOR; options; GROWTH

摘要

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.