Financial Markets and Marketing: The Tradeoff between R&D and Advertising during an Economic Downturn
Surinder Tikoo
State University of New York at New Paltz
Ahmed Ebrahim
Dolan School of Business, Fairfield University
INTRODUCTIONDuring an economic downturn, investors pressure firms to closely evaluate and change discretionary expenditures (Srinivasan, Rangaswamy, and Lilien, 2005). We do not know, however, how investors respond to changes in discretionary expenditures that firms make during an economic downturn. This study examines investor response to relative changes in the key discretionary expenditures of research and development (R&D) and advertising that firms made during an economic downturn. Specifically,...