Advertising Spending, Competition and Stock return. UCLA Marketing Studies Center Working paper

The paper investigates one important aspect of long-term investor response to marketing actions, namely, the relationship between advertising spending and stock return. We hypothesize that advertising can have a direct effect on valuation, i.e. an effect over and above its known impact on revenue and profit response. The empirical results in two industries support our hypothesis and quantify the investor-response impact of advertising spending for the firm as well as its competition.