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Advertising Expenditures Interaction with Business Cycles and Firm Value: An Empirical Analysis with US Companies

Graziela Fortunato, Walter Ness (), Arilton Teixeira () and Paulo Cesar Motta ()
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Walter Ness: Pontificia Universidade Catolica do Rio de Janeiro

Brazilian Review of Finance, 2010, vol. 8, issue 3, 283-306

Abstract: This study aims to verify the contribution of advertising expendituresto firm value. To reach this goal, we considered business cycles, whichfollow a stochastic process and may influence the decision as to the amount to be spent in advertising. With the optimization of these expenditures under the business cycle effect, it is, in fact, possible to analyze whether the results positively contribute to firm value. Data from US companies of the consumer staples sector from 1997 to 2008 were employed to test the proposed model through multiple regression and panel data. The results indicate favorable evidences which confirm the proposed model.

Keywords: advertising; marketing; finance; stochastic process; optimization. (search for similar items in EconPapers)
JEL-codes: M10 M37 (search for similar items in EconPapers)
Date: 2010
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