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Is soft information substitutive or complementary to hard news for investor attention? Evidence from corporate advertising in Japan

Author

Listed:
  • Aman, Hiroyuki
  • Kasuga, Norihiro
  • Moriyasu, Hiroshi

Abstract

Corporate advertising is a type of soft information that may not directly target the financial markets but may attract investors’ attention. In this study, we consider television advertisements (TV ads) as soft information, whereas corporate news via disclosure and mass media as hard news. We explore the interactive effect of TV ads (soft information) with corporate news (hard news) on stock market outcomes. Based on daily market data with the multi-dimensional information sources, we find that TV ads significantly increase trading volume and returns, conditional on less corporate news being released. Our evidence supports the information substitution hypothesis that TV ads compete with corporate news owing to investors’ limited attention, while rejecting the complementary relationship between soft and hard information.

Suggested Citation

  • Aman, Hiroyuki & Kasuga, Norihiro & Moriyasu, Hiroshi, 2023. "Is soft information substitutive or complementary to hard news for investor attention? Evidence from corporate advertising in Japan," Research in International Business and Finance, Elsevier, vol. 66(C).
    • Handle: RePEc:eee:riibaf:v:66:y:2023:i:c:s0275531923001939
    DOI: 10.1016/j.ribaf.2023.102067
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    Keywords

    Soft information; Hard news; Advertising; Stock market; Investor attention;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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