Frenemies: Corporate Advertising Under Common Ownership

Ruichang Lu (), Qiaowei Shen (), Tenghui Wang () and Xiaojun Zhang ()
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Ruichang Lu: Guanghua School of Management, Peking University, Beijing 100871, China
Qiaowei Shen: Guanghua School of Management, Peking University, Beijing 100871, China
Tenghui Wang: Guanghua School of Management, Peking University, Beijing 100871, China
Xiaojun Zhang: Guanghua School of Management, Peking University, Beijing 100871, China

Management Science, 2022, vol. 68, issue 6, 4645-4669

Abstract: In this paper, we investigate the impact of ownership structure on corporate advertising expenditures. Using mutual fund mergers as an exogenous shock to ownership structure, we find that competing firms owned by the same institutional blockholders experience a significant reduction in advertising expenditure. The reduction in advertising expenditure is more likely to occur in the presence of higher coordination benefits or lower coordination costs. Specifically, this effect is more pronounced for firms in more competitive industries, in higher advertising-intensity industries, with greater common ownership, with more concentrated institutional ownership, and with headquarters located in the same state. Overall, our empirical evidence indicates that ownership by common institutional investors significantly affects corporate advertising strategy.

Keywords: common ownership; advertising expenditure; coordination benefit and cost (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:68:y:2022:i:6:p:4645-4669

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