The Effects of Marketing Expenses on the Firm Performance of Quoted Consumer Goods Firms in the Nigerian Exchange Group (NGX)
##plugins.themes.EpsilonTheme.article.main##
Samuel Ughulu Ehimen
Ochuko Joy Edheku
Jacob Martins Siga
Festus Elugom Ubogu
Samuel Ejiro Uwhejevwe-Togbolo*
The study investigated the effects of marketing expenses on the firm performance of quoted consumer goods firms in the Nigerian Exchange Group (NGX). The study acknowledged that a firm’s value is a reflection of the company's expected future worth, which is primarily determined by its marketing efforts. Thus, a company's value represents its anticipated future worth, which primarily depends on its marketing initiatives. Short-term profitability is also negatively impacted by marketing and advertising expenses. The analysis modifies the previous approach employed in research of the BIST Textile, Leather Index and the secondary data is utilized on 22 quoted companies between 2020 - 2024. This was done by cross-sectional time series analysis and pooled Ordinary Least Squares (OLS) regression. This study's finding is that marketing must be considered by the consumer goods companies in Nigeria as an investment that will yield profits, especially when operational measurements, including ROA and ROE, are taken into account. Managers must also remember that the response of the stock market to marketing efforts cannot always be instantaneous, as accounting performance and thus long-term preparation and patience must be planned. The study concluded that the size of the firm also contributed to the moderated performance results, especially in the way the market views the value. It was recommended in the study that to achieve performance benefits and prevent damaging underinvestment, firms have to achieve minimum levels of effective marketing investments.
Barth, M. E., Clement, M. B., Foster, G., & Kasznik, R. (1998). Brand Values and Capital Market Valuation. Review of Accounting Studies, 3(1–2), 41–68. https://doi.org/10.1023/A:1009620132177
Bublitz, B., & Ettredge, M. (1989). The Information in Discretionary Outlays: Advertising, Research, and Development. The Accounting Review, 64(1), 108–124. http://www.jstor.org/stable/248131
Chan, L. K. C., Lakonishok, J., & Sougiannis, T. (2000). The Stock Market Valuation of Research and Development Expenditures. NBER Working Paper No. W7223. https://ssrn.com/abstract=227564
Chauvin, K. W., & Hirschey, M. (1993). Advertising, R&D Expenditures and the Market Value of the Firm. Financial Management, 22(4). https://econpapers.repec.org/RePEc:fma:fmanag:chauvin93
Coşkun, E., Kök, D., & Atilla, Y. (2010). Short and Long Term Effects of Marketing Operations on Firm Value in ISE Listed Firms. Finans Politik ve Ekonomik Yorumlar Dergisi, 47(540). https://search.trdizin.gov.tr/en/yayin/detay/219861/pazarlama-faaliyetlerinin-firma-degerine-kisa-ve-uzun-donem-etkilerinin-incelenmesi-imkb-ornegi
Demir, F. (2005). Militarization of the Market and Rent‐Seeking Coalitions in Turkey. Development and Change, 36(4), 667–690. https://doi.org/10.1111/j.0012-155X.2005.00429.x
Doğan, M., & Mecek, G. (2021). Pazarlama Harcamalarının Firma Değeri Üzerindeki Etkisi Üzerine Bir Araştırma. İşletme Araştırmaları Dergisi, 7(2 SE-Makaleler), 180–194. https://isarder.org/index.php/isarder/article/view/235
Han, B. H., & Manry, D. (2004). The value-relevance of R&D and advertising expenditures: Evidence from Korea. The International Journal of Accounting, 39(2), 155–173. https://doi.org/10.1016/j.intacc.2004.02.002
Haryanto, T., & Retnaningrum, M. (2020). The Impact of Marketing Expenditure on Firm Performance. Jurnal Manajemen Bisnis, 11(2). https://doi.org/10.18196/mb.11297
Hirschey, M., & Weygandt, J. J. (1985). Amortization Policy for Advertising and Research and Development Expenditures. Journal of Accounting Research, 23(1), 326. https://doi.org/10.2307/2490921
Jose, M. L., Nichols, L. M., & Stevens, J. L. (1986). Contributions of diversification, promotion, and R&D to the value of multiproduct firms: A Tobin’s q approach. Financial Management, 33–42.
Konak, F. (2015). The Effects of Marketing Expenses on Firm Performance: Empirical Evidence from the BIST Textile, Leather Index. Journal of Economics, Business and Management, 3(11). https://doi.org/10.7763/JOEBM.2015.V3.335
Lustgarten, S., & Thomadakis, S. (1987). Mobility Barriers and Tobin’s q. The Journal of Business, 60(4), 519. https://doi.org/10.1086/296411
O’Brien, J. P. (2003). The capital structure implications of pursuing a strategy of innovation. Strategic Management Journal, 24(5), 415–431. https://doi.org/10.1002/smj.308
Peterson, R. A., & Jeong, J. (2010). Exploring the impact of advertising and R&D expenditures on corporate brand value and firm-level financial performance. Journal of the Academy of Marketing Science, 38(6), 677–690. https://doi.org/10.1007/s11747-010-0188-3
Shah, S. Z. A., & Akbar, S. (2008). Value relevance of advertising expenditure: A review of the literature. International Journal of Management Reviews, 10(4), 301–325. https://doi.org/10.1111/j.1468-2370.2007.00228.x
Srinivasan, S., & Hanssens, D. (2008). Marketing and Firm Value: Metrics, Methods, Findings, and Future Directions. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.1136332
Umboh, O. M., & Yanti, H. B. (2025). The Effect of Financial Performance and Corporate Social Responsibility on Firm Value with Firm Size as a Control Variable. Transekonomika: Akuntansi, Bisnis Dan Keuangan, 5(2), 354–362. https://doi.org/10.55047/transekonomika.v5i2.860
