 Recession-proof marketing? Unraveling the impact of advertising efficiency on stock volatilityBakr Al-Gamrh and
Tareq Rasul
Post-Print from HAL 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. Date: 2024-03 Published in International Review of Financial Analysis, 2024, 92, pp.103087. ⟨10.1016/j.irfa.2024.103087⟩ There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04403803 DOI: 10.1016/j.irfa.2024.103087 Access Statistics for this paper More papers in Post-Print from HAL |
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