Faculty of Business Administration
FBE Brown Bag Seminar
Prof. Shantanu BANERJEE
Professor in Finance, Lancaster University
We examine how an industry leader’s competitors respond when financial fraud by the leader is publicly revealed. We document evidence of predatory advertising – close competitors of the leader step up advertisement spending relative to control firms. Although we do not directly observe product prices, we find that profit margins drop, consistent with predatory pricing. Predatory advertising is stronger when the fraud firm has higher leverage, and when the average leverage of rival firms is lower. The effects appear mainly in industries that produce customized products and consumer switching costs are high. Increasing advertising expenditure appears to be a more potent predatory strategy in industries that experience new customer growth, whereas cutting prices appears more potent in industries with stagnant customer base.
Date: 04 Dec 2019 (Wednesday)
A Short Biography
Professor Shantanu Banerjee joined as a Lancaster University in 2005 after finishing his doctoral studies at Hong Kong University of Science and Technology (HKUST). He specializes in empirical research in Corporate Finance topics including the investment decisions of firms, financing choice, product market strategy, IPO, bankruptcy, executive compensation and corporate social responsibility. His work has been published in journals such as the Journal of Finance, Review of Finance, Journal of Corporate Finance, European Journal of Operational Research and Journal of Business Ethics. He is the director of the PhD programme (Finance area) at Lancaster and organizes several annual workshops and research events on Corporate Finance. Before starting the doctoral programme in Finance in HKUST, he studied in Economics in India and has an MPhil degree in Economics from Centre for Economic Studies and Planning, Jawaharlal Nehru University (JNU), India. A brief summary of his current and published work can be found at: https://sites.google.com/view/shantanu-banerjee/home
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