The effects of advertising on shareholder value

This dissertation presents an analysis of the effects that advertising expenditure announcements have on shareholder value. Event time studies were conducted for firms which had an advertising expenditure announcements during the period 1977 through 1986.;This study indicated that announcements of higher (lower) advertising expenditures resulted in an increase (decrease) in shareholder value. The effects of advertising on shareholder value was significant in convenience goods industries, thus following the prescriptions of industrial economic theory. In addition, the results indicated that abnormal returns were affected by investor's expectations. Investor's expectations were influenced by the firm's prior advertising history as well as the release of a prior marketing strategy by the firm.