IDEAS home Printed from https://ideas.repec.org/p/ehl/lserod/64130.html
   My bibliography  Save this paper

Investors’ reactions to company advertisements: the persuasive effect of product-featuring ads

Author

Listed:
  • Aspara, Jaakko
  • Chakravarti, Amitav

Abstract

Purpose – This article aims to focus on product-featuring advertising targeted to stock investors – that is, ads that provide investors with impressions about the company’s products, over and above financial information. The purpose is to explicate and test the psychological mechanisms by which such ads may exert influence on investors. Design/methodology/approach – An experiment is conducted with a representative sample of real investors, to test the effect and explore the underlying mechanisms. Two additional laboratory experiments reveal moderating factors of this effect. Findings – The results show that highlighting the company’s product features in an investor ad increases investors’ interest in investing in the company’s stock, by enhancing investors’ subjective evaluations of the company’s products. This effect emerges independent of factors related to preexisting brand perceptions (e.g. brand recognizability and likeability) and is mediated by dual causal channels: by increasing expectations about the company’s financial returns and by increasing affective attachment with the company’s products. Research limitations/implications – The findings identify and confirm different mechanisms of the effect of investor ads, but the relative magnitude of the effects is not generalizable. Practical implications – The results provide corporate marketing, corporate communications and investor relations professionals insights into how investors may be attracted by product-featuring advertisements. Originality/value – The study is the first to explicate the different channels of influence through which product-featuring ads may affect investors’ willingness to invest in companies.

Suggested Citation

  • Aspara, Jaakko & Chakravarti, Amitav, 2015. "Investors’ reactions to company advertisements: the persuasive effect of product-featuring ads," LSE Research Online Documents on Economics 64130, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:64130
    as

    Download full text from publisher

    File URL: http://eprints.lse.ac.uk/64130/
    File Function: Open access version.
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Frieder, Laura & Subrahmanyam, Avanidhar, 2005. "Brand Perceptions and the Market for Common Stock," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 40(1), pages 57-85, March.
    2. Priya Raghubir & Sanjiv R. Das, 2010. "The Long and Short of It: Why Are Stocks with Shorter Runs Preferred?," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 36(6), pages 964-982, April.
    3. Fama, Eugene F. & French, Kenneth R., 2007. "Disagreement, tastes, and asset prices," Journal of Financial Economics, Elsevier, vol. 83(3), pages 667-689, March.
    4. Armstrong, J. Scott & Overton, Terry S., 1977. "Estimating Nonresponse Bias in Mail Surveys," MPRA Paper 81694, University Library of Munich, Germany.
    5. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    6. Ryan S. Elder & Aradhna Krishna, 2012. "The "Visual Depiction Effect" in Advertising: Facilitating Embodied Mental Simulation through Product Orientation," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 38(6), pages 988-1003.
    7. Dongmin Ke & Lilian Ng & Qinghai Wang, 2010. "Home bias in foreign investment decisions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(6), pages 960-979, August.
    8. Lucy F. Ackert & Bryan K. Church, 2009. "Home bias: taking comfort in what you know?," International Journal of Behavioural Accounting and Finance, Inderscience Enterprises Ltd, vol. 1(2), pages 152-166.
    9. Frank Fehle & Sergey Tsyplakov & Vladimir Zdorovtsov, 2005. "Can Companies Influence Investor Behaviour through Advertising? Super Bowl Commercials and Stock Returns," European Financial Management, European Financial Management Association, vol. 11(5), pages 625-647, November.
    10. Karlsson, Anders & Norden, Lars, 2007. "Home sweet home: Home bias and international diversification among individual investors," Journal of Banking & Finance, Elsevier, vol. 31(2), pages 317-333, February.
    11. Clark-Murphy, Marilyn & Soutar, Geoffrey N., 2004. "What individual investors value: Some Australian evidence," Journal of Economic Psychology, Elsevier, vol. 25(4), pages 539-555, August.
    12. Morse, Adair & Shive, Sophie, 2011. "Patriotism in your portfolio," Journal of Financial Markets, Elsevier, vol. 14(2), pages 411-440, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Shelly Srivastava & Supriyo Roy, 2023. "Impact of Equity Investment Intention Towards Behaviour: An Empirical Analysis," Vision, , vol. 27(3), pages 329-346, June.
    2. Marta Pizzetti & Lucia Gatti & Peter Seele, 2021. "Firms Talk, Suppliers Walk: Analyzing the Locus of Greenwashing in the Blame Game and Introducing ‘Vicarious Greenwashing’," Journal of Business Ethics, Springer, vol. 170(1), pages 21-38, April.
    3. Gatti, Lucia & Pizzetti, Marta & Seele, Peter, 2021. "Green lies and their effect on intention to invest," Journal of Business Research, Elsevier, vol. 127(C), pages 228-240.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Aspara, Jaakko & Chakravarti, Amitav & Hoffmann, Arvid O. I., 2015. "Focal versus background goals in consumer financial decision-making: trading off financial returns for self-expression?," LSE Research Online Documents on Economics 64129, London School of Economics and Political Science, LSE Library.
    2. Baltzer, Markus & Stolper, Oscar & Walter, Andreas, 2013. "Is local bias a cross-border phenomenon? Evidence from individual investors’ international asset allocation," Journal of Banking & Finance, Elsevier, vol. 37(8), pages 2823-2835.
    3. Jalilvand, Abolhassan & Noroozabad, Mojtaba Rostami & Switzer, Jeannette, 2018. "Informed and uninformed investors in Iran: Evidence from the Tehran Stock Exchange," Journal of Economics and Business, Elsevier, vol. 95(C), pages 47-58.
    4. Lee, Junyong & Lee, Kyounghun & Oh, Frederick Dongchuhl, 2023. "International portfolio diversification and the home bias puzzle," Research in International Business and Finance, Elsevier, vol. 64(C).
    5. Usul, Naime & Özdemir, Özlem & Kiessling, Timothy, 2017. "Affect-based stock investment decision: The role of affective self-affinity," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 68(C), pages 97-109.
    6. Kim, Joonkyung & Zhao, Min & Soman, Dilip, 2023. "Converging vs diverging: The effect of visual representation of goal structure on financial decisions," International Journal of Research in Marketing, Elsevier, vol. 40(2), pages 362-377.
    7. Ya-Hui Hsu & Wenchang Fang & Yuanchung Lee, 2009. "Ethically Questionable Behavior in Sales Representatives – An Example from the Taiwanese Pharmaceutical Industry," Journal of Business Ethics, Springer, vol. 88(1), pages 155-166, April.
    8. Jaakko Aspara & Arvid Hoffmann, 2015. "Selling losers and keeping winners: How (savings) goal dynamics predict a reversal of the disposition effect," Marketing Letters, Springer, vol. 26(2), pages 201-211, June.
    9. Namwoon Kim & Jin K. Han & Rajendra K. Srivastava, 2002. "A Dynamic IT Adoption Model for the SOHO Market: PC Generational Decisions with Technological Expectations," Management Science, INFORMS, vol. 48(2), pages 222-240, February.
    10. Kenneth David Strang, 2012. "Man versus math: Behaviorist exploration of post-crisis non-banking asset management," Journal of Asset Management, Palgrave Macmillan, vol. 13(5), pages 348-367, October.
    11. Nicolau, Juan L., 2012. "The effect of winning the 2010 FIFA World Cup on the tourism market value: The Spanish case," Omega, Elsevier, vol. 40(5), pages 503-510.
    12. Hauck, Jana & Suess-Reyes, Julia & Beck, Susanne & Prügl, Reinhard & Frank, Hermann, 2016. "Measuring socioemotional wealth in family-owned and -managed firms: A validation and short form of the FIBER Scale," Journal of Family Business Strategy, Elsevier, vol. 7(3), pages 133-148.
    13. Ding, Rong & Hou, Wenxuan & Liu, Yue (Lucy) & Zhang, John Ziyang, 2018. "Media censorship and stock price: Evidence from the foreign share discount in China," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 55(C), pages 112-133.
    14. Wood, Matthew S. & McKelvie, Alexander & Haynie, J. Michael, 2014. "Making it personal: Opportunity individuation and the shaping of opportunity beliefs," Journal of Business Venturing, Elsevier, vol. 29(2), pages 252-272.
    15. Agata Kliber & Blanka Let & Aleksandra Rutkowska, 2016. "Socio-demographic characteristics of investors in the Warsaw Stock Exchange – How they influence the investment decision," Bank i Kredyt, Narodowy Bank Polski, vol. 47(2), pages 91-118.
    16. Diacon, Stephen & Hasseldine, John, 2007. "Framing effects and risk perception: The effect of prior performance presentation format on investment fund choice," Journal of Economic Psychology, Elsevier, vol. 28(1), pages 31-52, January.
    17. Worm, Stefan & Srivastava, Rajendra K., 2014. "Impact of component supplier branding on profitability," International Journal of Research in Marketing, Elsevier, vol. 31(4), pages 409-424.
    18. Lepthien, Anke & Papies, Dominik & Clement, Michel & Melnyk, Valentyna, 2017. "The ugly side of customer management – Consumer reactions to firm-initiated contract terminations," International Journal of Research in Marketing, Elsevier, vol. 34(4), pages 829-850.
    19. Sojin Jung & Hyeon Jeong Cho & Byoungho Ellie Jin, 2020. "Does effective cost transparency increase price fairness? An analysis of apparel brand strategies," Journal of Brand Management, Palgrave Macmillan, vol. 27(5), pages 495-507, September.
    20. Jennifer Oetzel & Chang Hoon Oh, 2021. "A storm is brewing: Antecedents of disaster preparation in risk prone locations," Strategic Management Journal, Wiley Blackwell, vol. 42(8), pages 1545-1570, August.

    More about this item

    Keywords

    Brands; Advertisements; Investments; Brand image; Product image;
    All these keywords.

    JEL classification:

    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ehl:lserod:64130. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: LSERO Manager (email available below). General contact details of provider: https://edirc.repec.org/data/lsepsuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.