The Spillover Effect Of Advertising On Capital Markets

Authors

  • Mayank Makhijani

Abstract

The study focusses on estimating the effect of advertisement on the Stock Price
Synchronicity of BSE FMCG Index. It is believed that when a firm advertises, it transmits information
related to the firm into the market gaining the attention of investors, that attention leads to lower
synchronicity of the shares listed in the capital market of India. Using the sample of firms listed under
the BSE FMCG Index from the years 2010 to 2019, it was found that advertising does not project a
significant result on the synchronicity of the share prices. The hypothesis developed for the study was
rejected and the validity of the model was checked by interchanging advertising intensity with two
other factors that can replace it, according to the earlier studies, and the results still were valid and the
hypothesis was rejected. The results prove that advertising in the product market does not play a role
that is informative and does not improve the information efficiency in the capital market, thus not
resulting in having a negative impact on the stock price synchronicity.

Published

2020-11-01

Issue

Section

Articles