Value of advertising by food manufacturers as investment in intangible capital

Qinrong Wu and Bruce Bjornson
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Qinrong Wu: University of Oklahoma, Postal: University of Oklahoma
Bruce Bjornson: 200 Mumford Hall, University of Missouri, Columbia, MO 65211, Postal: 200 Mumford Hall, University of Missouri, Columbia, MO 65211

Agribusiness, 1996, vol. 12, issue 2, 147-156

Abstract: We use Tobin's q model to investigate the impact of food manufacturers' advertising as an investment in intangible capital. Intangible capital value created by advertising relates to expected growth and economic rents derived from brand equity. We study the relations between advertising and firm value under varying economic and consumer food market conditions from 1973 to 1991. We find that food manufacturing firms' advertising activity is strongly related to intangible capital value during the high value-added food product proliferation of the 1980s, and during recessions, including the 1990 to 1991 recession when consumers resisted higher margin, branded food products. © 1996 John Wiley & Sons, Inc.

Date: 1996
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Persistent link: https://EconPapers.repec.org/RePEc:wly:agribz:v:12:y:1996:i:2:p:147-156

DOI: 10.1002/(SICI)1520-6297(199603/04)12:2<147::AID-AGR4>3.0.CO;2-2

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