Advertising is pervasive. Nowadays, advertisers bombard us with appeals or reminders from the moment we wake up till the moment we fall asleep. Why have firms being spent so much on advertising? Of course it has impact on sales and firm’s profit, but does advertising spending really affect to investors’ perspective? And is it a weak force or strong force? Should firms spend on advertising as much as good? Answers to these questions are critically important because advertising plays an important role in our economy, society, and entrepreneurs, besides still there are a lot of controversies and considerations around advertising expenditure and its effectiveness. In order to clear these issues somehow, this thesis will use event study methodology to capture the market investors’ attitude toward advertising expenditure by testing how the stock market’s response at the very moment a firm announce its advertising budget.

Aaker, D. A., & Carman, J. M. (1982). Are you overadvertising? Journal of Advertising Research, 22(4), 57-70.

Aaker, D. A., & Jacobson, R. (Writer) (1994). The financial information content of perceived quality [Article], Journal of Marketing Research (JMR): American Marketing Association.

Abdel-khalik, A. R. (1975). Advertising effectiveness and accounting policy. Accounting Review, 50(4), 657-670.

Acs, Z. J., & Audretsch, D. B. (1989). Small firm entry in US manufacturing. Economica, 56(222), 255-265.

Ayanian, R. (1983). The advertising capital controversy. The Journal of Business, 56(3), 349.

Ball, R., & Brown, P. (1968). An empirical evaluation of accounting income numbers. Journal of Accounting Research, 6(2), 159-178.

Ben-Zion, U. (1978). The investment aspect of nonproduction expenditures: An empirical test. Journal of Economics and Business, 30, 224-229.

Benston, G. J. (1982). Accounting numbers and economics values. Antitrust Bulletin, 27 Sping, 161-215.

Bester, H., & Petrakis, E. (1995). Price competition and advertising in oligopoly. European Economic Review, 39(6), 1075-1088.

Bublitz, B., & Ettredge, M. (Writer) (1989). The Information in discretionary outlays: Advertising, research, and development, Accounting Review: American Accounting Association.

Chan, L. K. C., Lakonishok, J., & Sougiannis, T. (2001). The stock market valuation of research and development expenditures. The Journal of Finance, 56(6), 2431-2456.

Chappell, W. F., Kimenyi, M. S., & Mayer, W. J. (1990). A poison probability model of entry and market structure with an application to U. S. industries during 1972-77. Southern Economic Journal, 56(4), 918-927.

Chauvin, K. W., & Hirschey, M. (1993). Advertising, R&D expenditures and the market value of the firm. FM: The Journal of the Financial Management Association, 22(4), 128.

Comanor, W. S., & Wilson, T. A. (1967). Advertising market structure and performance Review of Economics & Statistics, 49(4), 423.

Connolly, R. A., & Hirschey, M. (1984). R & D, market structure and profits: A value-based approach. The Review of Economics and Statistics, 66(4), 682-686.

Core, J. E., Guay, W. R., & Buskirk, A. V. (2003). Market valuations in the new economy: An investigation of what has changed. Journal of Accounting and Economics, 34(1-3), 43-67.

Dimson, E., & Marsh, P. (1986). Event study methodologies and the size effect : The case of UK press recommendations. Journal of financial Economics, 17(1), 113-142.

Dodd, P., & Warner, J. B. (1983). On corporate governance: A study of proxy contests. Journal of financial Economics, 6 (April 1983), 401-438.

Duffy, M. (Writer) (1999). The influence of advertising on the pattern of food consumption in the UK [Article], International Journal of Advertising.

Elliott, C. (2001). A cointegration analysis of advertising and sales data. Review of Industrial Organization, 18(4), 417-426.

Erickson, G., & Jacobson, R. (1992). Gaining comparative advantage through discretionary expenditures: The returns to R&D and advertising. MANAGEMENT SCIENCE, 38(9), 1264-1279.

Fama, E. F. (Writer) (1970). Efficient capital markets: A review of theory and empirical work, Journal of Finance: Blackwell Publishing Limited.

Foster, G., Olsen, C., & Shevlin, T. (1984). Earnings Releases, Anomalies, and the Behavior of Security Returns. The Accounting Review, 59(4), 574-603.

Frieder, L., & Subrahmanyam, A. (Writer) (2005). Brand perceptions and the market for common stock, Journal of Financial & Quantitative Analysis: Journal of Financial & Quantitative Analysis.

Gifford, J. D. (1997). The value of going green. Harvard Business Review, 75(5), 11-12.

Grabowski, H. G., & Mueller, D. C. (1978). Industrial research and development, intangible capital stocks, and firm profit rates. The Bell Journal of Economics, 9(2), 328-343.

Graham, R. C., & Frankenberger, K. D. (2000). The Contribution of Changes in Advertising Expenditures to Earnings and Market Values. Journal of Business Research, 50(2), 149-155.

Gujariti, D. N. (2006). Essential of econometrics: Gary Burke.

Han, B. H., & Manry, D. (2004). The value-relevance of R&D and advertising expenditures: Evidence from Korea. The International Journal of Accounting, 39(2), 155-173.

Hertzendorf, M. N., & Overgaard, P. B. (2001). Price competition and advertising signals: Signaling by competing senders. Journal of Economics & Management Strategy, 10(4), 621-662.

Hirschey, M. (1981). The Effect of Advertising on Industrial Mobility, 1947-72. Journal of Business, 54(2), 329-339.

Hirschey, M. (1982). Intangible Capital Aspects of Advertising and R & D Expenditures. The Journal of Industrial Economics, 30(4), 375-390.

Hirschey, M., & Weygandt, J. J. (Writer) (1985). Amortization Policy for Advertising and Research and Development Expenditures [Article], Journal of Accounting Research: Blackwell Publishing Limited.

Hula, D. G. (Writer) (1988). Advertising, new product profit expectations, and the firm's R&D investment decisions [Article], Applied Economics: Routledge.

Jones, J. P. (2000). The mismanagement of advertising. [Editorial Material]. Harvard Business Review, 78(1), 22-+.

Keller, K. L. (2002). Strategic brand management: Building, measuring, and managing brand equity.

KEWEI HOU, & ROBINSON, D. T. (2006). Industry concentration and average stock returns. The Journal of Finance, 61(4), 1927-1956.

Kirmani, A. (1990). The effect of perceived advertising costs on brand perceptions. Journal of Consumer Research, 17, 160-171.

Kirmani, A. (1997). Advertising repetition as a signal of quality: If it's advertised so much, something must be wrong. Journal of Advertising, 26, 77-86.

Kirmani, A., & Wright, P. (1989). Money talks: Perceived advertising expense and expected product quality. Journal of Consumer Research, 16, 344-353.

Kothari, S. P., & Wasley, C. E. (1989). Measuring Security Price Performance in Size-Clustered Samples. The Accounting Review, 64(2), 228-249.

Kwoka, J. E., Jr (1993). The sales and competitive effects of styling and advertising practices in the U.S. auto industry. The Review of Economics and Statistics, 75(4), 649-656.

Lambert, R. A., & Larcker, D. F. (1985). Golden parachutes, executive decision-making, and shareholder wealth. Journal of Accounting and Economics, 7 (April 1985), 179-204.

Lambin, J. J. (1969). Measuring profitability of advertising - Empirical study [Article]. Journal of Industrial Economics, 17(2), 86-103.

Lambin, J. J. (1976). Advertising, competition, and market conduct in oligopoly over time.

Lev, B., & Sougiannis, T. (1996). The capitalization, amortization, and value-relevance of R&D. Journal of Accounting and Economics, 21(1), 107-138.

Mathur, L. K., & Mathur, I. (2000). An analysis of the wealth effects of green marketing strategies. Journal of Business Research, 50(2), 193-200.

McWilliams, A., & Siegel, D. (Writer) (1997). Event studies in management research: Theoretical and empirical issues [Article], Academy of Management Journal: Academy of Management.

Megna, P., & Mueller, D. C. (1991). Profit rates and intangible capital. The Review of Economics and Statistics, 73(4), 632-642.

Morck, R., & Yeung, B. (1991). Why investors value multinationality. Journal of Business, 64, 165-187.

Netter, J. M. (1982). Excessive advertising: An empirical analysis. Journal of Industrial Economics, 30(4), 361-373.

Ohlson, J. A. (Writer) (1978). On the theory of residual analyses and abnormal performance metrics Australian Journal of Management: University of New South Wales.

Palda, K. S. (1965). The measurement of cumulative advertising effects. The Journal of Business, 38(2), 162.

Peles, Y. C. (1979). Econometric measurement of the duration of advertising effect on sales: A comment. Journal of Marketing Research (JMR), 16(2), 284-285.

Picconi, M. J. (1977). A reconsideration of the recognition of advertising assets on financial statements. Journal of Accounting Research, 15(2), 317-326.

Reilly, F. K., & McGann, A. F. (1977). Advertising decisions and stockholders' wealth. Journal of Advertising Research, 17(4), 49-56.

Rosenbaum, D. I. (1993). Profit, entry and changes in concentration. International Journal of Industrial Organization, 11(2), 185-203.

Seldom, B. J., & Jung, C. (1995). The length of the effect of aggregate advertising on aggregate consumption. Economics Letters, 48(2), 207-211.

Simon, J. L. (Writer) (1969). The effect of advertising on liquor brand sales [Article], Journal of Marketing Research (JMR): American Marketing Association.

Simpson, A. (Writer) (2008). Voluntary disclosure of advertising expenditures, Journal of Accounting, Auditing & Finance: Greenwood Publishing.

Singh, M., Faircloth, S., & Nejadmalayeri, A. (2005). Capital market impact of product marketing strategy: Evidence from the relationship between advertising expenses and cost of capital. Journal of the Academy of Marketing Science, 33(4), 432-444.

Strong, N. (1992). Modelling abnormal returns: A review article Journal of Business Finance & Accounting, 19(4), 533-553.

Sudarsanam, P. S. (1992). Market and industry structure and corporate cost of capital. The Journal of Industrial Economics, 40(2), 189-199.

Telser, L. G. (1964). Advertising and competition. The Journal of Political Economy, 72(6), 537-562.

Vernon, J. M., & Nourse, R. E. M. (1973). Profit rates and market structure of advertising intensive firms. The Journal of Industrial Economics, 22(1), 1-20.

Weiss, L. W. (1969). Advertising, profits, and corporate taxes. The Review of Economics and Statistics, 51(4), 421-430.