Abstract
Corporate advertising is a type of soft information that may not directly target the financial markets but may attract investors’ attention. In this study, we consider television advertisements (TV ads) as soft information, whereas corporate news via disclosure and mass media as hard news. We explore the interactive effect of TV ads (soft information) with corporate news (hard news) on stock market outcomes. Based on daily market data with the multi-dimensional information sources, we find that TV ads significantly increase trading volume and returns, conditional on less corporate news being released. Our evidence supports the information substitution hypothesis that TV ads compete with corporate news owing to investors’ limited attention, while rejecting the complementary relationship between soft and hard information.
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