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Book part

Bernard Paranque and Bernard Cova

The aim of the chapter is to focus on the connections between three types of actors who build the new world of brands – consumers, marketers, and financier – by focusing…

Abstract

Purpose

The aim of the chapter is to focus on the connections between three types of actors who build the new world of brands – consumers, marketers, and financier – by focusing on the co-creation of value between the brand community and the company owning the brand.

Methodology/approach

The chapter use three case vignettes to highlight the dual process at play when a community of consumers co-create brand value.

Findings

The chapter not only highlights a value-creating trajectory for companies but also shows how a reverse process can destroy value for the very same companies. It suggests that marketers’ desire to maximize the value co-created between the company and the community in order to answer the financial requirement of brand valuation could damage the value co-creation process. According to our case vignettes’ results, these marketers are exposing themselves to the risk that consumers/fans will rebel as a result of this branding maximization, leading in return to the creation of a competitor in the form of a community brand.

Research limitations/implications

Future research will have to investigate how by cutting across organizational boundaries and functional areas, brand communities would reshape the marketing–finance interface.

Practical implications

The chapter stresses the need for companies to manage carefully the triadic relationship community/marketing/finance in order to avoid the development of a reverse brand value destruction process. In addition, the chapter contributes to research on the marketing–finance interface by highlighting the need to look beyond this level of interaction when it comes to branding.

Originality/value

Starting with the principle that consumers grouped into communities are increasingly responsible for making brands through their value-creating practices, the chapter highlights the problems raised by the company’s will to transform them into value for shareholders.

Details

Finance Reconsidered: New Perspectives for a Responsible and Sustainable Finance
Type: Book
ISBN: 978-1-78560-980-0

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Article

Jiyao Xun and Biao Guo

The purpose of this paper is to investigate the relationship between customer’s electronic word-of-mouth (eWOM) regarding their direct service experiences with firms and…

Abstract

Purpose

The purpose of this paper is to investigate the relationship between customer’s electronic word-of-mouth (eWOM) regarding their direct service experiences with firms and these firms’ company value. The authors drew on the marketing-finance interface research approach to demonstrate how interactive social media adopted by individual customer relate to important firms’ financial performances.

Design/methodology/approach

The authors used seven American airline companies’ customers’ tweets collected during a 52-week observation period and paired with their corresponding financial data using stock returns and volatilities. Sentiment analysis algorithm and a vector autoregressive (VAR) model quantified the strong association between customer’s eWOM and these firms’ stock returns and volatilities.

Findings

The results show that customer’s eWOM regarding a firm positively associate with the firm’s stock return but negatively associate with its stock volatility; as negative valence of customer’s eWOM increases, the positive effect of eWOM on firm’s stock return decreases; the negative eWOM impacts on the stock market more profoundly compared with when both positive and negative sensitivities are considered; and eWOM’s wear-out effect is much shorter than that of traditional WOM.

Originality/value

The authors address a literature gap where little is known for how customer’s eWOM, that is evaluating firm services, can ultimately impact on firms’ long-term financial performances. The authors discuss how findings from this study offer implications for marketing management as well as strategic insights for practitioners and investment analysts alike.

Details

Internet Research, vol. 27 no. 5
Type: Research Article
ISSN: 1066-2243

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Article

J. Ratnatunga, G.J. Hooley and R. Pike

A literature review on interface development between marketing andfinance precedes the report of a study exploring attitudes towards andthe organisation of this interface

Abstract

A literature review on interface development between marketing and finance precedes the report of a study exploring attitudes towards and the organisation of this interface in the Australian food industry. The study was a questionnaire survey following preliminary in‐depth interviews with senior executives in 21 companies. The existence of relevant functional titles pointed to companies taking steps to bridge gaps in the interface. Location of offices in proximity to each other was another positive factor. Only in areas of knowledge and understanding of each other′s function was there dissonance between marketing and finance.

Details

European Journal of Marketing, vol. 24 no. 1
Type: Research Article
ISSN: 0309-0566

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Article

Kwangmin Park and SooCheong (Shawn) Jang

The purpose of this study is to present a brief overview of hospitality finance/accounting (HFA) research and to propose the utility of interdisciplinary research in the…

Abstract

Purpose

The purpose of this study is to present a brief overview of hospitality finance/accounting (HFA) research and to propose the utility of interdisciplinary research in the HFA field.

Design/methodology/approach

This study outlines HFA research and adds a brief summary of mainstream finance and accounting research topics. To further improve HFA research, this study suggests the need for interdisciplinary research that could effectively integrate finance/accounting with other management subjects in the hospitality field.

Findings

Despite its importance, interdisciplinary research has not been given enough attention in the field of HFA. This study sheds light on the need for interdisciplinary research and proposes paths for conducting interdisciplinary HFA research, such as behavioral finance, marketing-finance interface, human resource management finance/accounting, etc.

Practical implications

This study suggests that the results of interdisciplinary HFA research can provide useful practical implications from shareholder and organizational perspectives in the hospitality industry.

Originality/value

Although the interdisciplinary research concept is not really new, it has not been extensively addressed in hospitality academia. In this respect, this study suggests expanding the horizon for HFA researchers.

Details

International Journal of Contemporary Hospitality Management, vol. 26 no. 5
Type: Research Article
ISSN: 0959-6119

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Article

Joost M.E. Pennings, Martin G.M. Wetzels and Matthew T.G. Meulenberg

The financial services industry is one of the fastest growing service industries. The financial services industry includes financial derivatives markets such as options…

Abstract

The financial services industry is one of the fastest growing service industries. The financial services industry includes financial derivatives markets such as options and futures markets. In order to ensure survival, firms providing financial services show a rapid product innovation. However, for financial services the risk of failure is considerable. Argues that a synthesis between the financial approach and the marketing approach towards financial services provides a conceptual framework for analysing the possible success or failure of futures contracts. The synthesis is illustrated by an empirical study of a new futures contract that might possibly be introduced.

Details

European Journal of Marketing, vol. 33 no. 5/6
Type: Research Article
ISSN: 0309-0566

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Article

Heather M. Meyer and Nacasius U. Ujah

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…

Abstract

Purpose

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.

Design/methodology/approach

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.

Findings

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.

Originality/value

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.

Details

Marketing Intelligence & Planning, vol. 35 no. 2
Type: Research Article
ISSN: 0263-4503

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Article

Arvid O.I. Hoffmann, Aida Tutic and Simone Wies

The purpose of this paper is to show the role of educational diversity in improving investor relations (IR) quality and examine how this impacts the number of shareholder…

Abstract

Purpose

The purpose of this paper is to show the role of educational diversity in improving investor relations (IR) quality and examine how this impacts the number of shareholder activism incidents a firm encounters.

Design/methodology/approach

The paper reviews literature on marketing, finance, and corporate communications to develop a conceptual framework which is tested using a combination of secondary data and primary data collected through a survey amongst IR professionals working at companies in the Euronext 100 stock index.

Findings

The empirical results support the conceptual framework, showing higher IR quality levels and lower shareholder activism intensity for companies with educationally diverse IR teams. In particular, the presence of marketing and communication experts in IR teams contributes to higher IR quality and lower shareholder activism.

Research limitations/implications

Future research may investigate the robustness of the results with larger and internationally diversified samples and examine how, besides educational diversity, other organizational arrangements through which finance professionals work together with marketing and communication professionals impact IR quality.

Practical implications

The results suggest that to improve their IR quality and minimize shareholder activism, companies should check and when necessary increase the educational diversity of their IR teams.

Originality/value

This is the first paper investigating the role of educational diversity on IR quality and the impact on shareholder activism, developing and testing an innovative conceptual framework that integrates marketing, finance, and corporate communication theory.

Details

Corporate Communications: An International Journal, vol. 16 no. 4
Type: Research Article
ISSN: 1356-3289

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Article

Ashraf Norouzi and Amir Albadvi

Marketing/finance interface and application of its new insights in marketing decisions have recently found great interest among marketing researchers and practitioners…

Abstract

Purpose

Marketing/finance interface and application of its new insights in marketing decisions have recently found great interest among marketing researchers and practitioners. There is a relatively large body of marketing literature about incorporating modern portfolio theory (MPT) into customer portfolio context and taking advantage of it in marketing resource allocation decisions. Previous studies have modelled customer portfolio risk in the form of historical return/profitability volatility of customer base. However, the risk is a future-oriented measure, and deals with future volatility associated with return stream. This study aims to address this research problem.

Design/methodology/approach

The well-known Pareto/non-binomial distribution (NBD) approach is used to model customer purchases in a non-contractual setting of research practice. Then, the results were used to simulate the customers’ future buying behaviour and associated returns via the Monte Carlo simulation approach. Subsequently, the mean-variance portfolio optimization model was applied to find the optimal customer portfolio mix.

Findings

The results illustrated the better performance of the proposed efficient portfolio versus the current customer portfolio. These results are applicable in analyzing customer portfolio composition, and can be used as a guidance to make decisions about marketing resource allocation in different segments.

Originality/value

This study proposes a new approach to analyze customer portfolio by using the customers’ future buying behaviour. Taking advantage of rich marketing literature about statistical assumptions describing the customers’ buying behaviour, this study tries to take some steps forward in the application of the MPT theory in customer portfolio management context.

Details

Management Research Review, vol. 39 no. 6
Type: Research Article
ISSN: 2040-8269

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Article

Hannah Oh, John Bae, Imran S. Currim, Jooseop Lim and Yu Zhang

This study aims to answer two unique related questions on the overarching relationship between a CEO’s personal religious affiliation, the firm’s advertising spending…

Abstract

Purpose

This study aims to answer two unique related questions on the overarching relationship between a CEO’s personal religious affiliation, the firm’s advertising spending decision and its shareholder value. First, does the CEO’s religious affiliation, a proxy for risk taking, influence the firm’s advertising spending decision? Second, does the advertising spending decision mediate the relationship between the CEO’s religious affiliation and the firm’s shareholder value?

Design/methodology/approach

This study uses data on the religious affiliations of CEOs of publicly listed US firms, 1992–2014, from Marquis Who’s Who; advertising spending and shareholder value from Compustat, and panel data-based regression models including CEO characteristics from ExecuComp, and firm-, industry- and time-based controls.

Findings

We find higher advertising spending levels for Protestant over Catholic-led firms, and advertising spending mediates the relationship between a CEO’s religious affiliation and the firm’s shareholder value.

Research limitations/implications

Marketing theory needs to incorporate the missing but fundamental effect of the CEO’s religious affiliation-based values on decisions and outcomes.

Practical implications

Boards of Directors may need to align the CEO’s and their firm’s spending goals.

Originality/value

While previous studies focused on the influence of religious affiliation on consumers’ attitudes and behavior, and executives’ financial and R&D spending decisions, this study, to the best of the authors’ knowledge, is the first to investigate the effect of a CEO’s religious affiliation on the firm’s advertising spending decision and its shareholder value.

Details

European Journal of Marketing, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0309-0566

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Article

Monica B. Fine, Kimberly Gleason and Michael Mullen

Increasingly, marketing managers are asked to consider the financial implications, in terms of both book and market values, when making strategic decisions. The purpose of…

Abstract

Purpose

Increasingly, marketing managers are asked to consider the financial implications, in terms of both book and market values, when making strategic decisions. The purpose of this paper is to investigate the role of marketing expenditures in explaining the variation in the aftermarket performance of a sample of firms conducting initial public offerings (IPOs).

Design/methodology/approach

Theories from marketing and finance – market-based assets (MBA) theory and signaling theory respectively – serve as the conceptual basis of this paper. The results of this study, based on a sample of 2,103 IPOs covering the 1996 to 2008 time period, suggest that increased marketing spending positively impacts aftermarket (i.e. stock price) performance.

Findings

The authors find that while short-run aftermarket performance is positively and significantly impacted by pre-IPO marketing spending, long-run firm performance measures do not appear to be impacted by pre-IPO marketing spending. Further, pre-IPO marketing spending does not incrementally reduce underpricing or improve long-run performance when the IPO takes place during extreme market conditions such as recessions or hot markets, and these results are important to the shareholders and potential investors in the firm.

Research limitations/implications

Theoretically this paper advances the literature on the marketing-finance interface by extending the MBA and signaling theories. For practice, the results indicate that spending more money on marketing before the IPO and disclosing this information produces positive bottom-line results for the firm.

Originality/value

While Luo (2008) documents a significant relationship between the firms’ pre-IPO marketing spending and IPO underpricing, few studies explore the impact of marketing spending on stock price performance beyond the first day of trading. This paper makes three unique contributions. First, the authors extend Luo’s study by investigating the effect of marketing expenditures on underpricing during extreme market conditions. Second, the authors are the first to examine IPO performance in the long-run as well as the short-run. Finally, the authors assess how long-run performance is impacted by marketing spending during extreme market conditions. The findings of this study has implications for managers and shareholders of firms considering going public through a traditional IPO.

Details

Marketing Intelligence & Planning, vol. 35 no. 4
Type: Research Article
ISSN: 0263-4503

Keywords

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