TitleThe Contribution of Changes in Advertising Expenditures to Earnings and Market Values
Publication TypeJournal Articles
Year of Publication2000
AuthorsGraham, R, Frankenberger, KD
JournalJournal of Business Research
Date Published2000
KeywordsAccounting, Doctoral Program, MBA

We examine the asset value of advertising expenditures for a sample of 320 firms with reported advertising expenditures for each of the 10 consecutive years ending in 1994. We find that, depending upon the industry, changes in advertising expenditures are significantly associated with earnings up to five years following the year of the expenditure. Furthermore, the asset values are significantly associated with the market values of the firms. Across all industries, the asset value of advertising expenditures appears to have a 3-year life with the greatest value on the current year and declining value in subsequent years. Asset values are found to be longest lived in the consumer products and industrial products industries and shortest lived in the sales and services industry.