Services advertising and providing services on the Internet

Abstract

The stock price reactions to announcements of advertising services and providing services on the Internet are examined in this paper. The overall results suggest that Internet‐related activities are generally desirable. However, the results suggest that announcements of services advertising on the Internet are not perceived as an important component of a service firm’s promotional strategy. On the other hand, announcements of providing services on the Internet produce an average significant stock price reaction of 0.85 percent. This result suggests that providing services on the Internet should be an important component of a service firm’s marketing strategy. When the sample is segmented by firms’ prior financial performances, the observed stock price reactions are significantly positive for firms with superior prior financial performances. These results suggest that service firms with above average financial performances would benefit from a presence on the Internet.