Advertising and Asymmetric Information : Evidences from Brazilian Stock Market

Abstract

This research demonstrates that it is possible for investors to anticipate the effects of advertising campaigns. It examined the longterm relationship between advertising and asymmetric information based on the theories of value creation through advertising and market microstructure. We assume that asymmetric information and advertising have a positive and significant relationship. Data from corporations listed on a developing stock market for 57 quarters were analyzed. Advertising was defined as the relationship between selling expenses, and asymmetric information according to the Corwin-Schultz S_2 measure. The results were controlled for traditional determinants of finance. A long-term relationship was observed between advertising and asymmetric information, thus confirming the theoretical framework. The implications are related to the anticipation of short- and long-term effects resulting from advertising through asymmetric information and cointegration to study the phenomena of the marketing-finance interface; restrictions are related to the coverage of the sample.