Advertising Agency Terminations and Reviews

Does Advertising Influence Investors? Evidence and Research Propositions

“…Conversely, announcements of additional work for an agency already linked to the firm were associated with rises in share price (Mathur and Mathur 1996). Extending that analysis, Hozier and Schatzberg (2000) found that announcements of both agency terminations and accounts placed under review were associated with declines in share price two days prior to the event date. The rumors concerning, and subsequent announcement of, Michael Jordan's return to the NBA in 1995 prompted a significant rise in the stock prices of five firms who were using Jordan as a product endorser.…”

Event Study Methodology in Marketing

“…The fact of considering only one source of information presents the risk that the event may be previously announced through some other means. Thus, in Hozier and Schatzberg's (2000) study, the impact was non-existent on the day of the announcement but was negative two days before it, which could mean that the information was available prior to its publication in The Wall Street Journal. One of the most interesting methodological choices was made by Kim and Morris (2003), who incorporated a measurement of public attitude to advertisements into their study.…”

“…According to Mathur and Mathur (1995), changes of advertising slogans lead to positive return on the window (2.10), although this deferred impact cannot be clearly explained. Conversely, the stock price has a tendency to fall when a break in relations between an advertiser and an advertising agency occurs (Hozier and Schatzberg, 2000) and when a new agency is chosen (Mathur and Mathur, 1996). Such announcements could be an indication of discontinuity or of a failure in the communication strategy.…”

The Marketing-Sales-Finance Triangle

“…Against this background it is not surprising that the link between marketing and investor relations attracts an increasing number of scholars (e.g., Davidson 1999;Hozier and Schatzberg 2000;Joshi and Hanssens 2004). At the heart of this research stream that follows a behavioral finance perspective is the assumption that investors are human beings and are hence equally receptive to marketing activities as consumers.…”