Search results

The purpose of this paper is to analyze the association between banks’ advertising expenses and accounting measures of income and profitability for banking sector.

In this study the authors have used distributed lag models to investigate the association between advertising expenses and banks’ financial performance. To investigate the long-term effect of advertising expenses on financial performance of banking sector Koyck’s distributed lag models have been used.

The results confirm a significant and positive association between advertising expenses and financial performance. Besides its positive effect, the authors provide a basis for detecting the extent to which advertising has long-term benefits. The results show a positive association between advertising expenses and financial performance that extend that extends over time, thereby suggesting that advertising expenses should be capitalized and then amortized instead of being incurred as an expense immediately.

Although there are lots of studies about advertising and its effect on financial position of firms, research about advertising effects on financial performance of banking sector is very scarce. Therefore, this study has a potential to shed light on research about marketing aspect of financial sector. Besides, empirical results show a positive association between advertising expenses and financial performance that extend that extends over time (interest income, total operating income and return on assets), thereby suggesting that advertising expenses should be capitalized and then amortized instead of being incurred as an expense immediately. To sum it all, the paper finds an evidence for banking sector that advertising inholds “future economic benefits” which is the key criterion necessary for asset recognition.

The purpose of this paper is to focus on promotional strategies, on which there has been relatively little research. The aim of this paper is twofold: first to review promotional strategies used by Greek wine producers to differentiate their products and second to develop and test a model that evaluates the relative importance of advertising expenses and other promotional expenses in explaining profit rates across Greek wine firms.

An extensive literature review relative to the question under investigation is presented. A survey among 43 Greek wine firms was carried out to identify the main categories of promotional expenses and their contribution to the total promotional expenditures for 2000. Annual balance sheet and income statements data for these firms were collected for the period 1993‐2000. The fixed effects method is used to estimate the coefficients of the specified empirical model using time series cross‐section panel data for the 43 Greek wine firms over the period 1993‐2000.

The non advertising promotional expenses were found to be the major part of promotional expenses, in the case of the Greek wine firms. For the Greek wine firms promotional expenses include promotion through the development of new informational labelling referred to origin and specific wine attributes, coupons, free samples, catalogues, new market channels through “wine routes”. These ways of promotion seem to be more effective to create goodwill for the company and to increase consumer loyalty than advertising. The fixed effects results show that total promotional expenses along with market share affect profitability.

This paper provides an outline of promotional strategies (advertising and non advertising) – a topic that has not been widely discussed in the literature.

Considers some costs with regard to long distance telephone services in the USA, particularly advertising and promotional expenses for US long distance telephone services between 1988 and 1997. Discusses shaping competition and advertising and promotional expenses, using Tables to give added emphasis. Concludes it is important to seek facts and make policy pragmatically.

The decisions marketing managers make on advertising expenditures are vital to maintaining the sales and profitability of a firm. However, these decisions have not been taken into account to a great enough extent when determining a firm’s performance. The purpose of this paper is to better understand the marketing-finance interface and to reveal the effect marketers’ discretionary advertising expenditures can have on firm performance. In particular, the real activities method of managed earnings (ME) will be used to study this phenomenon.

The initial sample consisted of all the companies that appear in the North American COMPUSTAT files over the period 1970-2014. Since the focus here is on the effect of discretionary advertising expenses on firm performance, the authors restricted the samples to only include observations with advertising expenses. Therefore, the sample included 14,732 firms.

OLS regressions revealed a negative relationship between marketers’ discretionary advertising expenditures and firm performance using return on assets as a proxy for firm performance. Additional regressions displayed similar results for return on sale and return on cash adjusted asset proxies. Fixed effect and Tobit regressions also confirmed these findings. Finally, this effect was especially true for low performing firms. The economic significance of these findings on firm performance is also discussed.

The decisions made by marketing managers on advertising promotional efforts impact sales directly and brand equity indirectly, but they can also have an impact on firm performance. Therefore, it is important for investors to understand the level of ME in relation to marketing and advertising decisions that are taking place at their firm.

Advertising intensity is treated either as a resource that allows firms to create competitive advantages (intangible asset view) or as an investment to build advertising resource (investment expense view). This current research supports the investment expense view. The authors do so by examining the moderating role of firm age (a proxy for knowledge) in the relationship between advertising intensity and performance as well as the influence of cultural communication styles on this moderation.

Secondary data were collected from multiple sources. With a sample of 262 companies from 10 countries (149 firms from high-context cultures and 113 firms from low-context cultures), ordinary least squares was used to estimate the regression coefficients to test the hypotheses. An instrumental variable approach with two-stage least squares estimates was used to address an endogeneity bias. Average industry advertising intensity excluding the focal firm was used as an instrumental variable.

The findings demonstrate that firm age significantly moderates the advertising intensity/performance relationship, but this moderation is only significant in high-context cultures. These findings imply that firms within high-context cultures must continually invest in advertising expenditures, while firms in low-context cultures may not need to do so to increase performance.

The results of this study provide insight into the debate of whether advertising expenditures boost performance, as well as provide international marketing managers with a clearer picture on how to invest in advertising within their respective markets.

A majority of the studies that examine the advertising intensity/performance link rely solely on the resource-based view. The authors utilize a multi-theoretical perspective to provide a fine-grained understanding of this relationship. Moreover, the authors apply the investment expense view to examine advertising intensity as an investment to build advertising resources, rather than a resource. This investment must be incorporated with the knowledge to properly employ the investment to develop advertising resources. Further, the authors find that firms expanding into high-context cultures must devote more effort into developing advertising capabilities to properly employ advertising resources than firms in low-context cultures.

The problem of differentiation and creating a unique selling proposition is higher in the banking sector, as, any new service or product introduced is very quickly imitated by the competitors. The benefits of advertising have been seen to have long-term effects on the firm’s performance and debate is still on whether the expenses of advertising should be amortized or expensed immediately has been the area of concern for many years. The purpose of this paper is to carry out a comparative analysis of advertising effectiveness on private and public sector banks in India.

This study has included 33 listed commercial banks out of 41 listed on S&P BSE 500. Out of 33 banks, 14 banks belong to private sector and 19 banks are public sector banks. Data are extracted for a period of 14 years from 2004 to 2017 from Ace Equity. In total, there are 462 firm-year observations. Interest income, operating income and return on assets are the accounting measures considered in this paper. All the variables are deflated by total assets at the beginning of the period. To assess the effect of advertising on financial measures, distributed lag model is used.

The results of Koyck model suggest that it takes lesser time for private sector banks to see a significant change in interest income and return on assets with a change in advertising expenses whereas in case of operating income, the results achieved are opposite.

This study may be useful from accounting point of view to find out whether advertising creates long-term or short-term impact on financial measures. The study would help in determining the number of years for which advertising expenses can be amortized. With the help of these results, it can be said that advertisement expenses can be capitalized and then expensed over coming years. This means, to some extent advertisement has some long-run impact on financial measures considered in the study. In order to achieve more robust results, this study can be performed on different sectors.

Examines the Accounting Standards Committee′s proposal that all advertising costs other than direct response be incurred or expensed the first time the advertising takes place. Suggests that managers who have been deferring the write‐off of advertising costs, the proposed rule change provides incentives to reduce the level of advertising and/or postpone these expenditures.

The purpose of this paper is to investigate the way in which CEOs are shielded or rewarded for incurring R&D expenses. Strategic expenses such as R&D yield returns over a long period of time even though GAAP requires them to be written off in the period they are incurred. Going beyond the existing shielding paradigm, the paper investigates whether compensation committees actively reward CEOs for incurring strategic expenses.

The paper uses empirical analysis by using regression analysis with CEO compensation (both cash and equity) as the dependent variable and firm size, firm performance, earnings risk, market‐to‐book ratio, R&D expenses, advertising expenses and governance variables as control, independent and test variables.

The paper shows that CEOs are not only shielded but are actively rewarded for incurring R&D expenses. The paper also shows that the shield/reward effects are stronger in manufacturing firms. Finally, the paper shows that independent compensation committees increase rewards for R&D expenses.

Given the small sample of firms with advertising expense data, a larger sample, possibly using hand‐collected data will be required to arrive at definitive conclusions regarding shielding/rewarding for advertising. Furthermore, the shielding of both R&D and advertising expenses should be looked at in conjunction with the duration of the persistence of benefits of such strategic expenses.

This paper shows how compensation committees can use compensation to induce executives to undertake strategic expenses on behalf of the firm.

The purpose of this paper is to examine the relationship of CEO compensation plans and the risk of managerial equity portfolios with the extent of strategic investments in advertising, capital expenditures and research and development (R&D). The elements of compensation are salary, bonuses, options and restricted stock grants. The authors proxy the design of CEO equity portfolios by the price performance sensitivity of the holdings and the portfolio deltas.

The authors use the components of executive compensation and portfolio risk as the dependent variables, regressing these against measures for the level of strategic investment. The authors test for non-linear relationships between the components of CEO compensation and strategic investments. The sample is a broad cross-section from 1992 to 2016.

The authors find strong support for non-linear relationships of capital expenditures and R&D with CEO bonuses, option grants and restricted stock grants. There are very complex relationships between the components of executive compensation and R&D expenditures, but little evidence of a relationship with advertising expenditures. The authors also find strong complex relationships in the design of CEO equity portfolios with advertising and R&D.

Little earlier research has considered advertising, capital expenditures and R&D in a unified framework. Also, testing for non-linear associations provides much greater insight into the relationship between the components of executive compensation and strategic investment. The findings represent a valuable incremental contribution to the executive compensation literature. The results also have normative policy implications for compensation committees’ design of optimal annual CEO compensation packages to incentivize or discourage particular strategic investment behavior.

Focusing on the early development of the three major forms of local advertising employed by independent department stores across the USA – newspapers, radio, and television – this paper examines continuity in the industry's commercial use of new technologies.

The research draws on different types of primary sources, including department store financial records and correspondence, retailing trade literature, industry publications, newspaper advertisements, and radio advertisement transcripts.

The local and regional markets of the independent department store, and to some extent, department store chains, required local advertising, something best served by newspapers in the period under study. While many retailers embrace the commercial potential of radio and television as they appear in the 1920s and late 1930s, respectively, others are reluctant to divert their advertising budget away from newspapers. Trade writers for the department store industry and radio and television reveal tension between the National Retail Dry Goods Association, with its progressive orientation and professionalizing goals, and the more traditional merchants these experts are trying to modernize. The paper also suggests, perhaps as a subject for future research, that as radio and television lost their local orientation and became increasingly commercialized and national, independent department store advertising would not have been able to compete with department store chains.

Although much has been written about national advertising, cultural, and business historians have conducted little research on local advertising, the type typically employed by independent department stores. This paper provides an introduction to the three major advertising formats most often used by independent department stores as each medium first emerged as a potential selling tool.