Higher advertising spending does not protect share prices from bad news, according to new research by the University of Georgia.
The 5-year study of 141 firms by the University of Georgia found that advertising increases individual investors’ attention and interest in the stock during positive media coverage.
However, more money spent on marketing could protect share value.
The study found that marketing strength was undervalued as it was difficult to communicate to outsider investors.
Study co-author Sundar Bharadwaj said firms should use advertising to promote their ability mitigate the effects of bad news through marketing to outside investors.
Read more at University of Georgia