Advertising and firm risk: a study of the restaurant industry.

Incorporating recent calls for understanding firm equity risk in relation to a firm's marketing efforts, this study examined the impacts of firm-level advertising spending on firm equity risk with publicly listed firms in the restaurant industrya key hospitality industry. This study hypothesized and tested the effects of firm-level advertising expenditures on different types of firm equity risk (i.e., total, systematic, and unsystematic risk). Unlike previous empirical findings, we found that an increase in advertising expenditures significantly increased total and unsystematic risk of sampled restaurant firms. The findings provide new insights into the effects of advertising on firm equity risk in the literature, and important theoretical and managerial implications for restaurant firms.