Advertising Exposure and Portfolio Choice: Estimates Based on Sports Sponsorships
56 Pages Posted: 6 Feb 2019 Last revised: 11 Aug 2019
Date Written: August 8, 2019
Product market advertising, by acting as a costly signal of quality, is thought to increase the demand for a company's stock as well as its products. I construct a dataset of publicly traded sports sponsors in the US and develop an instrument for investor exposure to advertising via these sponsorships. I show that investors living in a city where major professional sports teams are sponsored by a given company, local or non-local, are more likely to purchase stocks in that company. The portfolio effects from sports sponsorships are large and suggest that advertising is even more important than local bias.
Keywords: Advertising, Portfolio Choice, Household Finance, Sports Sponsorships, Local Bias
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