South Asian Journal of Management

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An Empirical Study on the Relevance of Advertising, Sales Promotion, R&D and Training and Development Expenses on Firm Value in the Indian Context


Affiliations
1 Management Development Institute Gurgaon, Gurugram 122007, India
2 University Institute of Applied Management Sciences (UIAMS), Panjab University, Chandigarh 160014, India
3 University Business School (UBS), Panjab University, Chandigarh 160014, India
     

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Discretionary expenses: R&D, advertisement, and training and development create intangible assets such as, innovative products, brand equity, and intellectual capital. Literature survey suggests that intangibles drive long-term value of the firm and reduce its systematic risk. Sales promotion expenses though create value in short-term, but dilute brand equity in the longterm and are a zero sum game. The present study has captured value relevance of such discretionary expenses on firm value in the Indian context. Positive and significant impact of sales promotion and training and development on firm value (Tobin’s q) in current year has been observed. Sales promotion impacts favorably in short-term, while no significant impact of R&D spend on firm value has been observed. Positive impact of training and development expenses on firm value has been captured and it does not dissipate with time. It emerges that firms may take holistic view of these discretionary expenses.

Keywords

Advertisement and Sales Promotion, Brand Value, Discretionary Expenses, Firm Value, Research and Development.
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  • An Empirical Study on the Relevance of Advertising, Sales Promotion, R&D and Training and Development Expenses on Firm Value in the Indian Context

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Authors

Manoj Anand
Management Development Institute Gurgaon, Gurugram 122007, India
Jagandeep Singh
University Institute of Applied Management Sciences (UIAMS), Panjab University, Chandigarh 160014, India
Karan Gandhi
University Business School (UBS), Panjab University, Chandigarh 160014, India

Abstract


Discretionary expenses: R&D, advertisement, and training and development create intangible assets such as, innovative products, brand equity, and intellectual capital. Literature survey suggests that intangibles drive long-term value of the firm and reduce its systematic risk. Sales promotion expenses though create value in short-term, but dilute brand equity in the longterm and are a zero sum game. The present study has captured value relevance of such discretionary expenses on firm value in the Indian context. Positive and significant impact of sales promotion and training and development on firm value (Tobin’s q) in current year has been observed. Sales promotion impacts favorably in short-term, while no significant impact of R&D spend on firm value has been observed. Positive impact of training and development expenses on firm value has been captured and it does not dissipate with time. It emerges that firms may take holistic view of these discretionary expenses.

Keywords


Advertisement and Sales Promotion, Brand Value, Discretionary Expenses, Firm Value, Research and Development.

References