The impact of advertising on security returns.
Item
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Title
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The impact of advertising on security returns.
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Identifier
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AAI9108092
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identifier
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9108092
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Creator
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Djeddah, Richard N.
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Contributor
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Adviser: Harry M. Markowitz
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Date
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1990
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Language
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English
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Publisher
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City University of New York.
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Subject
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Business Administration, General | Economics, Finance
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Abstract
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This dissertation proposes that advertising affects purchasing behavior of security investors in some similar way as it affects consumer behavior in product purchasing. Product advertising may influence investors to buy stock in the advertising companies. Test results demonstrate that product advertising is an important factor in explaining security returns. Moreover, we infer that by using product advertising, firms can increase their market value.;Two advertising-security purchase related processes were distinguished in this study, namely "brand-linked" and "non-brand-linked". A "brand-linked" situation takes place when an advertised product and the company that produces it have the same name. In this case, the name listed on the securities exchange is the same name as the product that is being advertised. A "non-brand-linked" occurs when the name of the advertised product differs from the name of the company producing it. In this case the exchange-listed name is different from the product name being advertised. The "brand-linked" situation was found to be the most powerful in explaining security returns. The concept of a product name being linked to the name of the firm that produces the product is becoming increasingly popular. The new names reflect deliberate management decisions that signal new directions or strategies for the corporation, to capitalize on the familiarity of a brand name, or to eliminate some perceived limitation to future growth. "Brand-link" induces consumers to identify firms with their product brands. Our study suggests that the "brand-link" firm/product identification also creates a buyer's familiarity with the firm name that makes him, as an investor, more likely to purchase stock in these firms. This study demonstrates the increased tendency of security buyers to purchase "brand-linked" stocks that they are more familiar with. We test the relationship of "brand-linked" and "non-brand-linked" firms to security returns.;This modified CAPM model incorporated advertising and yielded statistically significant results. In other words, firms are able to increase their market value by increasing their visibility to investors through product advertising.
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Type
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dissertation
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Source
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PQT Legacy CUNY.xlsx
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degree
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Ph.D.
