자료실
자료실
[2014년 제 4차] Advertising, Shareholder Base, and Firm Value
작성자 : 관리자
조회수 : 987
게시일 :
2014-12-12
We test Merton’s investor recognition hypothesis (1987) using an approach that links advertising, shareholder base, and firm value. Specifically, we employ a two-stage regression approach where we obtain the residual shareholder base attributable to advertising in the first stage and then use these residuals as an input into the second-stage regression of firm value. Our sample covers stocks traded on the NYSE, AMEX, and Nasdaq and spans 37 years from 1975 to 2011. We find that advertising increases the shareholder base and this in turn increases firm value. However, not all firms enjoy the benefits of added investor recognition resulting from advertising. The positive valuation effect is observed only when firms are less visible in the market, proxied by a small investor base, being listed on Nasdaq, and a young firm age. Finally, we find that the linkage between advertising and firm value via shareholder base has weakened gradually over the last three decades. We conjecture that recent developments in the media industry and information technology have contributed to this phenomenon.