Title

Investor sentiment and advertising expenditure

Source of Publication

International Journal of Research in Marketing

Abstract

© 2018 Elsevier B.V. A strategic issue facing marketing managers is ‘how much and when’ to spend on advertising. We argue that investor sentiment in the stock market may influence advertising expenditure by affecting firms’ ability to raise new funds. We show that during periods of low (high) investor sentiment, firms decrease (increase) their advertising expenditure, even though the effectiveness of advertising is greater (lower) during such periods. We also find that these results are stronger for financially constrained firms that rely more on external financing. Our findings suggest that marketing managers can improve the efficiency of their advertising expenditure by raising (reducing) it during periods of low (high) sentiment.

Document Type

Article

First Page

611

Last Page

627

Publication Date

12-1-2018

DOI

10.1016/j.ijresmar.2018.08.005

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