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Corporate advertising expense and share price synchronization

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  • Chou, Yixuan
  • Tang, Wenjin

Abstract

The article examines the impact of a firm's product-market advertising campaign on stock price synchronization. Based on a sample of listed companies in the Chinese A-share market that have disclosed advertising expenditure, we find that the advertising expenditure of listed companies significantly increases the extent to which information about firm characteristics is incorporated into the stock price, thereby inhibiting stock price synchronization. Moreover, the negative relationship between product market advertising expenditure and stock price synchronization is more significant when the firm's internal and external information asymmetry is higher.

Suggested Citation

  • Chou, Yixuan & Tang, Wenjin, 2023. "Corporate advertising expense and share price synchronization," Finance Research Letters, Elsevier, vol. 56(C).
    • Handle: RePEc:eee:finlet:v:56:y:2023:i:c:s1544612323004981
    DOI: 10.1016/j.frl.2023.104126
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