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Advertising, product market competition and stock returns

Author

Listed:
  • Huong Le

    (Vietnam National University)

  • Andros Gregoriou

    (University of Brighton)

  • Tung Nguyen

    (Academy of Policy and Development)

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.

Suggested Citation

  • Huong Le & Andros Gregoriou & Tung Nguyen, 2023. "Advertising, product market competition and stock returns," Review of Quantitative Finance and Accounting, Springer, vol. 60(4), pages 1605-1628, May.
    • Handle: RePEc:kap:rqfnac:v:60:y:2023:i:4:d:10.1007_s11156-023-01143-6
    DOI: 10.1007/s11156-023-01143-6
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    References listed on IDEAS

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    More about this item

    Keywords

    Advertising intensity; Product market competition; Stock returns;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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