Product market competition and corporate advertising expenditure: Evidence from a natural experiment

Xin Cui, Xinyuan Ji, Wei Meng and Qi Song

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

Abstract: Using the implementation of “Catalogue for the Guidance of Industries for Foreign Investment” in China in 2015 as an exogenous shock, we adopt the difference-in-differences (DIDs) method to explore the relationship between product market competition and corporate advertising expenditure. The result shows that product market competition significantly promotes corporate advertising expenditure, and the result is robust after conducting a series of robustness tests. In addition, we further examine the effects of product market competition on corporate advertising expenditure in firms with different characteristics. The results show that the effect is more pronounced for non-state-owned enterprises, small-scale firms, and high-tech firms. Overall, this paper supports that product market competition plays a vital role in promoting corporate advertising expenditure.

Keywords: Advertising expenditure; Product market competition; DIDs (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:s0275531922002355

DOI: 10.1016/j.ribaf.2022.101849

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