The Lagged Effect of Advertising Expenditures on the Financial Measures of Brand Equity in the Egyptian Context

Nermin M Gohar

doi:10.47191/ijsshr/v4-i9-26

Abstract

This research intends to fill the gap in the literature by studying the impact of lagged real advertising expenditures on different perspectives of brand equity in the Egyptian context, which are: Firm-based and Market-based brand equity. The research follows the quantitative research-based approach, with the descriptive explanatory method. Secondary data was collected from firms’ financial reports of sixteen sectors for the period 2013 - 2020 to consider the effect of real advertising expenditures on firm-based and market-based brand equity models. Data was collected from 168 listed companies in the Egyptian stock exchange market, after deleting the financial institutions. The unit of analysis was the corporate brands and data collected was panel data analyzed using Eviews program – version 10, using GLS regression. Results showed that market risk significantly moderates the relationship between advertising expenditures and Firm-based and Market-based brand equity.

Highlights

Brand equity is one of the important intangible assets that can contribute significantly to the performance of the company, as brand equity is positively correlated with profits and return on investment, and brand equity is linked to financial benefits and investor risks
Firm-based Brand Equity (FBBE) Model the Firm-based Brand Equity (FBBE) Model is tested using secondary data for each corporate indexed in the Egyptian Stock Market for the period 2013 - 2020
This research aims at investigating the moderation role of market risk in the relationship between Advertising Expenditures and Brand Equity, it was found that there is a significant effect of the interaction variable between Market Risk and Advertising Expenditures on return on assets (ROA), return on equity (ROE) and Tobin’s Q

Summary

Introduction

Brand equity is one of the important intangible assets that can contribute significantly to the performance of the company, as brand equity is positively correlated with profits and return on investment, and brand equity is linked to financial benefits and investor risks. Everything the organization encompasses (from infrastructure to core values) and the management it communicates serves to reinforce and explain its heritage and current practices All the elements, such as the brand name, logo, slogan, etc., developed by the organization, and brought to market in order to form a favorable brand image, generate FBBE (Williams et al, 2014). Brand value is an ideal way to reduce this uncertainty and information asymmetry (Nguyen et al, 2013). In this perspective, the measures focused on stock prices or brand substitution. Advertising expenditures can improve the efficiency of resource allocation in the capital market and reduce information asymmetry between the company and external stakeholders, especially investment groups. This paper is presented in five sections, as follows: section (1) investigates the theoretical

Objectives

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Conclusion