Advertising, Breadth of Ownership, and Liquidity
Top Cited Papers
- 11 August 2003
- journal article
- Published by Oxford University Press (OUP) in The Review of Financial Studies
- Vol. 17 (2) , 439-461
- https://doi.org/10.1093/rfs/hhg039
Abstract
We provide empirical evidence that a firm's overall visibility with investors, as measured by its product market advertising, has important consequences for the stock market. Specifically we show that firms with greater advertising expenditures, ceteris paribus, have a larger number of both individual and institutional investors, and better liquidity of their common stock. Our findings are robust to a variety of methodological approaches and to various measures of liquidity. These results suggest that the investors' degree of familiarity with a firm may affect its cost of capital and consequently its value.Keywords
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