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Voluntary disclosure of advertising expenditures

By Ana Simpson


In this paper I examine the incentives for voluntary disclosure of advertising expenditures for a sample of US firms for the period 1994-2003. I estimate proxies for the proprietary costs and valuation benefits of advertising with data from the mandatory disclosure period. My proxy for proprietary costs is an estimate of the spillover effects of advertising. It is measured by the association between a firm's advertising investments and its competitors' market values or future profitability. Valuation benefits are defined by an estimate of the relation between the firm's own advertising outlays and its market value or future operating income. I use these proxies to explain firms' discretionary disclosure decisions and I find that firms, which experienced high proprietary costs (valuation benefits) from advertising during the mandatory disclosure period, are less (more) likely to disclose their advertising expenses in the discretionary disclosure period

Topics: HF5601 Accounting
Publisher: SAGE Publications on behalf of the Vincent C. Ross Institute of Accounting Research, The Leonard N. Stern Business School
Year: 2008
DOI identifier: 10.1177/0148558X0802300306
OAI identifier:
Provided by: LSE Research Online
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