 Recession-proof marketing? Unraveling the impact of advertising efficiency on stock volatilityBakr Al-Gamrh and Tareq Rasul International Review of Financial Analysis, 2024, vol. 92, issue C Abstract: The current study examines how corporate advertising efficiency (estimated using data envelopment analysis) is impacted during economic recessions. The study then investigates how advertising efficiency affects stock price volatility in recession and non-recession times. Drawing on the resource-based view and contingency theory, this study utilizes generalized method of moments (GMM) estimation to analyze a sample of US listed firms. The findings reveal that advertising efficiency tends to decline during economic downturns. Moreover, the study demonstrates that firms with higher advertising efficiency experience more stable stock prices during normal economic conditions. However, an interesting observation emerges during recessions, as firms with strong advertising efficiency face higher stock price volatility. This suggests that while consumers are attracted to efficient advertisements, investors do not assign the same value to advertising spending during economic contractions. Importantly, these results are robust to endogeneity issues and various measurements of variables. Keywords: Advertising efficiency; Stock price; Recessions; Economic change (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:92:y:2024:i:c:s105752192400019x DOI: 10.1016/j.irfa.2024.103087 Access Statistics for this article International Review of Financial Analysis is currently edited by B.M. Lucey More articles in International Review of Financial Analysis from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.