Analysis shows advertising influences shareholder value with temporal variations, indicating strategic implications for firms.
The purpose of this research is to further examine the relationship between advertising expenditures and shareholder value. Using an alternative valuation framework, we are able to determine the exact dollar amount of shareholder value added by investments in advertising. This twenty-year sample of 2,852 unique firms is also used to examine important temporal variations in the advertising-shareholder value relationship. Essentially, we show that the monetary value shareholders ascribe to advertising expenditures can be measured and varies over time. Our findings present strategic opportunities and challenges for researchers, managers, analysts, and shareholders.
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Hill et al. (2020) studied this question.
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