Skip to main content
Open Access Publications from the University of California

Commitment to marketing spending through recessions Better or worse stock market returns?

  • Author(s): Currim, Imran S
  • Lim, Jooseop
  • Zhang, Yu
  • et al.

This study addresses two unique and important questions. First, how do recessions directly affect firms’ marketing spending decisions? Second, and more importantly, do firms which are more committed to marketing spending through past recessions achieve better stock market returns? Based on a combination of NBER, COMPUSTAT and CRSP data on 6,000 firms between 1982 and 2009 analyzed employing panel data based regression models we find that firms cut marketing spending during recessions. More importantly, firms committed to marketing spending during past recessions achieve better stock market returns. The findings are found to be robust across B2B and B2C industries, different time periods, and firms which vary on the proportion of their global revenue from U.S. sales. They key managerial implication is that top executives cut marketing budgets during recessions, however, if they can resist the pressures, and strategically continue to make marketing investments during recessions they will achieve higher stock market returns.

Many UC-authored scholarly publications are freely available on this site because of the UC's open access policies. Let us know how this access is important for you.

Main Content
Current View