Chapter 5: Marketing Information Disclosures: A Review and Research Agenda
Raji Srinivasan and Debika Sihi* Corporate information is disseminated through financial reporting required by the SEC (Securities and Exchange Commission) (e.g., 10-K or 10-Q) and through various scheduled (e.g., conference calls) and unscheduled (e.g., press releases) disclosures. A large body of theoretical and empirical work in accounting and finance literature has examined the effects of a firm’s information disclosure policies, as well as the costs and benefits of these disclosures (e.g., Leuz and Verrecchia, 2000). In this chapter, we define ‘marketing information disclosure’ as any information the firm discloses about its marketing activities and programs, marketing assets, and marketing personnel. Accordingly, marketing information disclosures are disclosures about the firm’s products, prices, distribution channels, entry into new markets, marketing alliances, and appointments (departures) of marketing executives. In line with Dierickx and Cool’s (1989) concept of ‘stock’ and ‘flows of assets,’ marketing activities (e.g., advertising, channel management, branding, customer relationship management) are flows that help firms build value-relevant marketing assets (e.g., brand equity, channel customer equity) (Srivastava et al., 1998). Thus, disclosures of marketing expenditure are of special interest to both senior management and finance executives who are concerned with profitability (Ambler, 2003; Rust et al., 2004) and to analysts following the firms. As Rust et al. (2004, p. 76) note ‘the spotlight is not on underlying products, pricing, or customer relationships . . . but on marketing expenditures (e.g., marketing communications, promotions, other activities) and how these expenditures influence marketplace performance.’ Empirically, marketing actions affect stock valuations through various mechanisms, including reduced risk...
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