Where is the Intersection of Madison Avenue and Wall Street? Advertisement, Local Access to Investment Advice, and Stock Market Participation

43 Pages Posted: 1 Sep 2021 Last revised: 7 Sep 2021

See all articles by Joseph Farizo

Joseph Farizo

University of Richmond - E. Claiborne Robins School of Business

William Christopher Gerken

University of Kentucky - Finance

Ge Wu

University of Richmond

Date Written: August 30, 2021

Abstract

We examine the effects of advertisement by investment advisory firms on household stock market participation. Exploiting variation in exposure to financial advertising for households along designated market area (DMA) borders, we find evidence that increased advertising by investment advisory firms leads to higher stock market participation. Importantly, the effects are concentrated in counties where the advertising firm has a physical presence. Consistent with fixed cost frictions to participation, these effects are predominantly among higher income households. We also find larger effects in counties with higher income and racial diversity - areas that are likely to have lower trust. Our results highlight the complementary nature of persuasive advertising and local access to finance for building trust in the market for investment advice.

Keywords: Stock market participation, Advertising, Trust, Local Access to Finance, Investment advisers

JEL Classification: D14, G24, L84, M37, G20

Suggested Citation

Farizo, Joseph and Gerken, William Christopher and Wu, Ge, Where is the Intersection of Madison Avenue and Wall Street? Advertisement, Local Access to Investment Advice, and Stock Market Participation (August 30, 2021). Available at SSRN: https://ssrn.com/abstract=3914328 or http://dx.doi.org/10.2139/ssrn.3914328

Joseph Farizo

University of Richmond - E. Claiborne Robins School of Business ( email )

Richmond, VA 23173
United States

William Christopher Gerken (Contact Author)

University of Kentucky - Finance ( email )

College of Business & Economics
Lexington, KY 40506-0034
United States

HOME PAGE: http://www.willgerken.com

Ge Wu

University of Richmond ( email )

102 UR Drive
Richmond, VA 23173
United States

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