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Korean J Financ Stud > Volume 47(4); 2018 > Article
Korean Journal of Financial Studies 2018;47(4):607-633.
DOI: https://doi.org/10.26845/KJFS.2018.    Published online August 31, 2018.
Advertising Expenditures, Number of Shareholders, and Stock Liquidity
Hyung Chul Lee, Hee-Joon Ahn
광고에 의한 기업 인지도 상승이 주주베이스 및 유동성에 미치는 영향
이형철, 안희준
While firms advertise to promote sales of their products or services in product markets, they also advertise to increase their visibility in capital markets. This improved visibility can help enlarge the firm’s shareholder base and improve liquidity in the context of Merton (1987). Using the stock market data for firms listed on the Korea Exchange from 2000 to 2013, we examine three empirical predictions regarding the effects of advertising on stock markets: (1) whether advertising increases shareholder base by increasing firm visibility; (2) whether advertising improves stock liquidity; and (3) whether the effects of advertising on both shareholder base and liquidity have changed over time with more alternative channels of communication becoming available, thus replacing advertising as means of improving investor recognition. We find empirical results that support all three predictions. Our results show that advertising expenditures are positively related to the number of small shareholders and stock liquidity. Further, the positive effects of advertising on shareholder base and liquidity have gradually weakened over time.
Key Words: 광고비,기업인지도,주주베이스,소액주주,유동성,Advertising Expenditures,Investor Recognition,Shareholder Base,SmallShareholders,Liquidity
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