Advertising, product market competition and stock returns

Huong Le (), Andros Gregoriou () and Tung Nguyen ()
Additional contact information
Huong Le: Vietnam National University
Andros Gregoriou: University of Brighton
Tung Nguyen: Academy of Policy and Development

Review of Quantitative Finance and Accounting, 2023, vol. 60, issue 4, No 12, 1605-1628

Abstract: Abstract This paper studies the joint effect of advertising intensity and product market competition on stock returns. Using a sample of the US market over the period from 1977 to 2018, we provide evidence that past advertising is negatively associated with stock returns and this relationship exists only for firms in competitive industries. Also, firms in competitive markets earn higher expected stock returns than firms in concentrated industries, especially among low advertising intensity groups. Our results are robust across alternative subsamples and product market competition measures. Our empirical estimates support the positive causal effect of concentration on advertising.

Keywords: Advertising intensity; Product market competition; Stock returns (search for similar items in EconPapers)
JEL-codes: G12 M37 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s11156-023-01143-6

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