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.
| Original language | English |
|---|---|
| Pages (from-to) | 1605-1628 |
| Number of pages | 24 |
| Journal | Review of Quantitative Finance and Accounting |
| Volume | 60 |
| Issue number | 4 |
| DOIs | |
| Publication status | Published - 15 Mar 2023 |
Keywords
- Advertising intensity
- Product market competition
- Stock returns