RT Journal Article SR Electronic T1 Financial Markets and Marketing JF Journal of Advertising Research JO J Advert Res FD WARC SP 50 OP 56 DO 10.2501/S0021849910091178 VO 50 IS 1 A1 Surinder Tikoo A1 Ahmed Ebrahim YR 2010 UL http://www.journalofadvertisingresearch.com/content/50/1/50.abstract AB This article examines the association between stock returns and earnings changes of firms that have made different tradeoffs with respect to R&D and advertising spending during an economic downturn. During the 2000–2002 bear market that was associated with a downturn in the U.S. economy, we find the coefficient that relates stock returns and earnings changes to be significantly greater for firms that increased their advertising expenditures and decreased their R&D expenditures than for firms that increased their R&D expenditures and decreased their advertising expenditures. Our results suggest that investors perceive that an increased emphasis on advertising can enable firms to stem earnings erosion that can potentially occur during an economic downturn.