| Summary: | 碩士 === 元智大學 === 財務金融學系 === 97 === The first part of this paper documented the abnormal return of changing advertising expenses announcements. We found no significant evidence about the abnormal return of changing advertising expenses announcements, but we found that when firm announces to increase their advertising expenses, the cumulative abnormal return from -20 announcement days is getting worse till +20 announcement days; however this change disappears in decreasing advertising expense firms. Second, this paper examined whether manager base on the different between analyst forecast and firm real value or distance from earning goal to change firm’s advertising expense for manipulate purpose (myopic investment behavior). Our result indicated that in group of firms that be undervalued largely by analyst, firm manager significantly reduces advertising expense to push short term earnings so as to perform better in analysts’ eyes but this manipulation behavior will disappear when analyst forecast become more accurate. Besides, firms with higher current earning relative to prior one or large declining current earning compare to that of prior period tended to increase advertising fees but not in firms with small declining current earning relative to prior earning. However we find that institutional investors have a strong power in monitoring firm and higher institution ownership give manger greater incentive to care for long-run value of firm.
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