Marketing Strategy after Meeting Wall Street: The Role of Information Asymmetry

Journal of Financial Research, 40(3), P. 369-400, 2017

46 Pages Posted: 28 Sep 2017 Last revised: 30 Oct 2017

See all articles by Minghui Ma

Minghui Ma

State University of New York at New Paltz

Michaël Dewally

Towson University - Department of Finance

Jian Huang

Towson University - College of Business and Economics

Date Written: August 1, 2017

Abstract

We relate marketing strategy to the Initial Public Offering (IPO) process during 1980-2010. Pre-IPO marketing intensity provides information to the market, which reduces underpricing and the magnitude of price revisions during the filing period. Firms that experience upward (downward) price revisions spend more (less) on marketing in the five-year period post IPO. Lastly, we confirm that marketing spending is related to a firm’s informational environment by finding a positive relation between marketing intensity and firm information transparency post IPO. This finding indicates that marketing spending is one channel through which a firm affects its perception by the public equity market at issuance and later.

JEL Classification: M30, G14

Suggested Citation

Ma, Minghui and Dewally, Michaël and Huang, Jian, Marketing Strategy after Meeting Wall Street: The Role of Information Asymmetry (August 1, 2017). Journal of Financial Research, 40(3), P. 369-400, 2017. Available at SSRN: https://ssrn.com/abstract=3039200

Minghui Ma

State University of New York at New Paltz ( email )

1 Hawk Drive
New Paltz, NY 12561-2443
United States

Michaël Dewally

Towson University - Department of Finance ( email )

8000 York Road
Suite 316 L
Baltimore, MD 21252-0001
United States
410-704-4902 (Phone)

Jian Huang (Contact Author)

Towson University - College of Business and Economics ( email )

8000 York Road
Towson, MD 21252
United States
410-704-3547 (Phone)
410-704-3454 (Fax)

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