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
Date Written: August 1, 2017
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: Suggested Citation