Investor sentiment and advertising expenditure

G. Mujtaba Mian, Piyush Sharma and Ferdinand A. Gul

International Journal of Research in Marketing, 2018, vol. 35, issue 4, 611-627

Abstract: A strategic issue facing marketing managers is ‘how much and when’ to spend on advertising. We argue that investor sentiment in the stock market may influence advertising expenditure by affecting firms' ability to raise new funds. We show that during periods of low (high) investor sentiment, firms decrease (increase) their advertising expenditure, even though the effectiveness of advertising is greater (lower) during such periods. We also find that these results are stronger for financially constrained firms that rely more on external financing. Our findings suggest that marketing managers can improve the efficiency of their advertising expenditure by raising (reducing) it during periods of low (high) sentiment.

Keywords: Advertising expenditure; Affordability method; Marketing expenditure; Investor sentiment; Stock market; Advertising effectiveness (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ijrema:v:35:y:2018:i:4:p:611-627

DOI: 10.1016/j.ijresmar.2018.08.005

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