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MARKETING STRATEGY AFTER MEETING WALL STREET: THE ROLE OF INFORMATION ASYMMETRY
Author(s) -
Ma Minghui,
Dewally Michaël,
Huang Jian
Publication year - 2017
Publication title -
journal of financial research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.319
H-Index - 49
eISSN - 1475-6803
pISSN - 0270-2592
DOI - 10.1111/jfir.12128
Subject(s) - initial public offering , business , marketing , information asymmetry , transparency (behavior) , equity (law) , marketing effectiveness , perception , marketing strategy , return on marketing investment , finance , neuroscience , political science , law , biology
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 years post‐IPO. 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.