Firing Advertising Agencies - Possible Reasons and Managerial Implications

Autor: Premal P. Vora, Terence A. Brown, Mukund S. Kulkarni
Rok vydání: 2003
Předmět:
Zdroj: Journal of Advertising. 32:77-86
ISSN: 1557-7805
0091-3367
DOI: 10.1080/00913367.2003.10639138
Popis: In this study we examine the possible reasons for the firing of ad agencies and relate these reasons to the stock price consequences of the firings using event-study methodology. After analyzing a variety of performance measures for profitability, sales, and market share of the client firms prior to the firing, we find that firms that fire their ad agencies have lost market share in the two quarters immediately preceding the firing. We report here, for the first time, that the fall in the stock price of client firms is significantly related to the fall in market share preceding the firing. Previously published research on ad agency firings has shown that the stock price of client firms falls just prior to the announcement of the ad agency firing. We confirm that result using a larger sample of firms over a longer period of time and then extend it to include the stock price impact on fired ad agencies (price falls) and their replacement ad agencies (price rises). In addition, the managerial implications of...
Databáze: OpenAIRE
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