Product recalls can cause uncertainty about firms’ future earnings.The financial market under uncertainty may use firm-initiated marketing near a recall as internal information to predict the consequences of the recall.When approaching a recall,firms may increase,decrease,or maintain the previous level of advertising.In this study,using automobile safety recalls during the period 2005-2011,we investigate whether and how advertising near auto recalls affects abnormal stock returns due to the recalls.Using an event-study analysis,we find that adjustments of pre-recall advertising in opposite directions (increase vs.decrease) as well as at two levels (recalled products vs.unrecalled products) impose different impacts on the stock market: for recalled products,an increase of advertising does not affect the stock market,while a decrease exerts a negative impact.For unaffected products,an increase of advertising is rewarded by the market,but a decrease is penalized.These findings identify a connection between pre-crisis advertising and firm value in recall crises,and such a connection may help in the creation of marketing strategies to deal with crisis management from the investors’ point of view.