What Do Investors Learn from Advertisements?

46 Pages Posted: 11 Sep 2017 Last revised: 20 May 2018

See all articles by Ruben Cox

Ruben Cox

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Peter de Goeij

Tilburg University

Date Written: September 8, 2017


Individual investors use advertisements to make investment decisions. We test how advertising content affects investor’s knowledgeability and evaluation of an equity offering. The results show that persuasive content (e.g. images) increases investor knowledgeability about fundamental characteristics of securities offerings while salient disclosure of risk factors only increases risk factor knowledge. Persuasive content also increases average investment amounts by 16 percent, while salient risk factor disclosure reduces the tendency to consult additional information. Our results are robust against differences in financial literacy and investor experience and provide insights for regulating investment marketing.

Keywords: investor behavior, financial knowledge, marketing, financial disclosure

JEL Classification: G11, G18, D91, M37

Suggested Citation

Cox, Ruben and de Goeij, Peter, What Do Investors Learn from Advertisements? (September 8, 2017). Available at SSRN: https://ssrn.com/abstract=3034144 or http://dx.doi.org/10.2139/ssrn.3034144

Ruben Cox (Contact Author)

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
+31 (0) 10 4088929 (Phone)

Peter De Goeij

Tilburg University ( email )

P.O. Box 90153
Room I607
Tilburg, Noord-Brabant 5000 LE
+31134662083 (Phone)

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