Does Size Determine Financial Performance of Advertising and Marketing Companies? Evidence from Western Europe on SDGs

Tetiana Zavalii, Iryna Zhyhlei, Olena Ivashko () and Artur Kornatka
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Tetiana Zavalii: Department of Management, Business and Marketing Technologies, Zhytomyr Polytechnic State University, 10005 Zhytomyr, Ukraine
Iryna Zhyhlei: Department of Information Systems in Management and Accounting, Faculty of Business and Services, Zhytomyr Polytechnic State University, 10005 Zhytomyr, Ukraine
Olena Ivashko: Faculty of Administration and Social Sciences, University of Economics and Innovation in Lublin, 20-209 Lublin, Poland
Artur Kornatka: Faculty of Social Sciences and Information Technology, Nowy Sacz School of Business National Louis University, 33-300 Nowy Sącz, Poland

Sustainability, 2025, vol. 17, issue 13, 1-30

Abstract: The relationship between firm size and the financial performance of advertising and marketing companies remains understudied in the academic literature, including in the regional context. Using a panel data methodology, this study analyzes the impact of three proxies for firm size (total assets, number of employees, and sales) on the financial performance (return on assets and profit margin) of the 500 most profitable advertising and marketing companies from 16 Western European countries over the period 2019–2023. Weighted least squares regression analysis revealed statistically significant negative effects of all three proxies for firm size on financial performance, with the strongest negative effects on total assets on return on assets and sales on profit margin, which is similar to return on sales. Empirical data confirm the inverse relationship between total assets and their profitability; this indicates the advantages of resource-optimized business models with high management flexibility and effective use of intellectual capital compared to material-intensive structures. The inverse relationship between the number of employees and financial performance is due to higher operating personnel costs and the difficulty of effectively managing human resources as the number of employees increases. Increased sales negatively affect profit margins, demonstrating a decrease in the efficiency of converting revenue into profits as operations expand. These findings are important for developing effective financial management strategies and making investment decisions in the industry under study. The research contributes to SDGs 8, 9, and 12 by demonstrating how resource-optimized structures with higher management flexibility and effective use of intellectual capital can outperform material-intensive structures in the advertising and marketing industry.

Keywords: SDGs 8 9 12; financial performance; firm size; financial management; advertising and marketing companies; panel data; total assets; number of employees; sales; Western Europe (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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