Creating value via R&D, marketing costs and financial matters

Abedalqader Rababah, Homa Molavi and Shayan Farhang Doust

Journal of Applied Accounting Research, 2022, vol. 23, issue 4, 863-883

Abstract: Purpose - The aim of this study is to examine the effect of financial leverage impact on customer satisfaction and marketing costs including research and development (R&D) and advertisement costs. Furthermore, the authors aim to investigate whether customer satisfaction as well as financial distress moderates the effect of financial leverage impact on customer satisfaction and marketing costs including R&D and advertisement costs. Design/methodology/approach - The statistical population of this study consists of listed companies on the Tehran Stock Exchange manually obtained from different industries in 2017. Multivariate regression based on data compilation methodology is used to test research hypotheses. Findings - The results indicate that financial leverage is negatively and significantly associated with customer satisfaction and this negative relationship is more pronounced in companies with lower sale growth. Furthermore, the authors' results suggest that customer satisfaction negatively (positively) and significantly affects firm value in companies with lower (higher)-financial leverage. The authors also demonstrate that there is no significant relationship between financial leverage caused by financial flexibility and firm value caused by customer's satisfaction (CS). The authors' findings also suggest that financial distress significantly affects the relationship between financial leverage and customer satisfaction. Finally, the authors' find that financial leverage significantly affects firms' R&D and advertisement costs. Research limitations/implications - Since the fundamental institutional assumptions underpinning the Western and even East Asia financial models are not valid in the institutional environment of Iran, the authors' findings could provide substantial implications for the authors' understanding of the relationship between finance and R&D costs and contribute substantially to customer satisfaction and firm value literature as well. The sample country of the present paper has recently experienced a spate of financial collapses that somewhat contributes, indirectly, to financial distress incurred by the Iranian firms. Moreover, R&D costs are growing among the Iranian quoted firms. Originality/value - Since the fundamental institutional assumptions underpinning the Western and even East Asia financial models are not valid in the institutional environment of Iran, the authors' findings could provide substantial implications for our understanding of the relationship between finance and R&D costs and contribute substantially to customer satisfaction and firm value literature as well. The sample country of the present paper has recently experienced a spate of financial collapses that somewhat contributes, indirectly, to financial distress incurred by the Iranian firms. Moreover, R&D costs are growing among the Iranian quoted firms.

Keywords: Financial leverage; Customer's satisfaction; Financial crisis; Firm value; Research and development costs (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jaarpp:jaar-05-2021-0130

DOI: 10.1108/JAAR-05-2021-0130

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