The Capital Market Implications of Product Market Advertising

Marketing actions have impacts on both consumer behaviour in the primary product market and investor behaviour in the capital market. Using a large sample of US firms, the thesis provides comprehensive evidence of the multi-faceted impacts of advertising, which extend beyond the traditional product market into the capital market. Advertising spending significantly affects investor behaviour, enriches the firm’s information environment and brings about a number of capital market benefits for the firm, including greater stock price informativeness (essay 1), a lower propensity for tax avoidance (essay 2) and ultimately a greater firm value (essay 3).