Peer effects in corporate advertisement expenditure: Evidence from China

Zhifang Su, Luhan Wang, Jing Liao and Xin Cui

Research in International Business and Finance, 2023, vol. 64, issue C

Abstract: This study investigates whether industry peers affect focal firms’ advertising expenditure decisions and further explores the mechanisms and economic consequences of such effects. We find that peer firms have a significantly positive influence on the focal firm’s advertising expenditure. The results hold after a series of robustness tests. Additionally, the peer effects in advertising expenditure are more salient in industries with intense competition; and when economic policy uncertainty and demand uncertainty is higher. Interestingly, our results show that followers mimic the advertising expenditure of industry leaders, while leaders also react to followers’ advertising expenditure. We also find that the peer effects in advertising expenditure improve firms’ sales and market value. Our study contributes to a better understanding of peer effects on corporate decisions.

Keywords: Peer effects; Advertising expenditure; Market competition; Economic uncertainty; China (search for similar items in EconPapers)
JEL-codes: G30 M21 (search for similar items in EconPapers)
Date: 2023
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:eee:riibaf:v:64:y:2023:i:c:s0275531922001945

DOI: 10.1016/j.ribaf.2022.101808

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