Investigating Joint Effects of Brand Value and Advertising Expenditure on Corporate Financial Performance and Stock Returns

Document Type : Original Article


1 Department Of Business Management,Qeshm Branch, Islamic Azad University, Qeshm, Iran

2 Associate Professor of Azad University Dept. of Business Management, Central Tehran Branch, Islamic Azad University, Tehran, IRAN.(Modern Financial Risk Research Group)

3 Faculty of management and accounting, Islamic Azad University, Islamshahr Branch(Modern Financial Risk Research Group)

4 Department of Business Management, Science and Research Branch, Islamic Azad University, Tehran, IRAN


Customer-oriented and firm-oriented perspectives are two dominant perspectives adopted in brand valuation. The former is the same as the behavioral marketing approach, while the latter focuses on financial data. The study used two financially focused brand valuation methods. The first method takes into account the three dimensions of marketing, finance, and accounting, and is known as the corporate brand success (CBS) valuation. The second method employed Tobin’s q ratio for brand valuation. Finally, the authors investigated the joint effects of brand value (from both methods) and advertising expenditure on corporate financial performance and stock returns of 77 food industry companies listed in Tehran Stock Exchange, Iran. To this end, unbalanced panel data modeling was used with 378 observations over a period of 21 years. The results confirmed the joint effect of advertising budget and brand value (from two methods) on return on assets, as an indicator of corporate financial performance. Regarding the second hypothesis, CBS valuation only confirmed the effect of brand value on stock returns. However, the entire hypothesis (i.e. the joint effect of advertising budget and brand value on stock returns) was confirmed when Tobin’s q ratio was used.


Azizi Shahriar, Darvishi Zahra, Namamian Farshid (2011), “Investigation of brand equity determinants in Tehran Stock Exchange Companies”, Journal of Business Management Perspective (Management Perspective), No. 2, pp. 9-32.
International Journal of Finance and Managerial Accounting / 273
Vol.7 / No.24 / Winter 2022
2) Aaker, D. (1991), “Managing brand equity”, Capitalizing on the Value of a Brand Name, New York: Free Press.
3) Attaran J, (2011), "A review of source-based approach in competitive advantage", Journal of Tadbir(Plan), N.232.
4) Belo, Frederico., Lin, Xiaoji. And Vitorino, Maria. (2013), available at
5) Billet Mattew T., Zhan Jiang, Rego Lopo L..(2014). Glamour brand and glamour stocks. Journal of Economic Behavior & Organization. Vol.107,pp. 744-759.
6) Charles Pahud DE Mortanges, Allard Van Riel.(2003), “Brand Equity and Sharholder Value”,European Management Journal, Vol.21,pp.521-527.
7) Chehab Adham, Liu Jeanny, Xiao Yibo (2016), ‘Do stockholders benefit from brand values?’, Global Finance Journal, Vol. 30, pp. 1-9.
8) Dutordoir, Marie, Frank H.M. Verbeeten, Dominique De Beijer. (2015), “Stock Price Reactions to Brand Value Aannouncements:Magnitude and Moderators”, Intrnet J. of Research in Marketing. Vol. 32, pp. 34-47.
9) Eng, L., & Keh, H. (2007). The Effects of Advertising and Brand Value on Future Operating and Market Performance. Journal of Advertising, 36(4): 91-100.
10) Herremans, I., Ryans, Jr., J., & Aggarwal, R. (2000), “Linking advertising and brand”, Business Horizons, (May-June): 19-26.
11) Hill Katerina G., Hill Mattew D., Kelly G.W. (2020), ‘Do market share and demand uncertainty influence the relation between advertising expenditures and shareholder value?’, Journal of Business Research, 115, 61-69
12) Kapareliotis, I. & Panopoulos, A.(2010), “The Determinants of Brand Equity” , Journal of Managerial Finance, 36(3),225-233.
13) Khani Abdollah, Ebrahimi Khadijeh, 2014, "The effect of brand value on companies' sales revenue and market value", Journal of Modern Marketing, Year 4, N.2.
14) Keller, K. L. (1999), “ Brand Mantras: Rational, Criteria and Examples” , Journal of Marketing Management, Vol.15, pp.43-51.
15) Kirk, C. P., Ray, I., Wilson, B., (2012), “The impact of brand value on firm valuation: The moderating influence of firm type”, Journal of Brand Management, Macmillan Publishers Ltd. 1350-63IX Jour.
16) Markoitch Dmitric G., Huang Dongling, Ye Pengfei (2020), ‘Marketing intensity and firm performance: Contrasting the insights based on actual marketing expenditure and in SG&A proxy’, Journal of Business Research, 118, 223-239.
17) Mizik, Natalei & Robert Jacobson.(2008). “Valuing Branded Business”, American Marketing Association,vol.73,pp.137-153.
18) Penrose, E. (1959). “ The Theory of the Growth of the Firm”, New York, NY John Wiley.
19) Peterson Robert A. & Jaeseok Jeong.(2010). Exploring the impact of advertising and R&D expenditures on corporate brand value and firm-level financial performance, J. of the Acad, Sci. (2010) 38:677–690.
20) Perfect, S. B. & K. W. Wiles, (1994), “Alternative Construction of Tobin, s Q: An Empirical Comparison”, Journal of Empirical Finance, 1(34), 31-41.
21) Rahnamay Roodposhti F., Jalili, M. (2008), “Scientific basics and new methods for calculating economic value added and its application in financial performance assessment and capital management in Tehran Stock Exchange”, Journal of Basirat, No. 15, pp. 31-50.
22) Ruenrom,Guntalee and Pattaratanakun,Suppakron, (2012),Corporate brand success valuation : an integrative approach to measuring corporate brands,International journal of business strategy, volume 12, Number 3.
23) Rust Roland T., Ambler Tim el.(2004). Measuring Marketing Productivity:Current Knowledge and Future Directions.Journal of Marketing , vol. 68,pp. 76-89.
24) Simon, Carol J. & Sullivan, M. W. (1993), “The Measurement and Determinants of Brand Equity: A Financial Approach”, Marketing Science, 12(1), 28-52.
25) Ukiwe,Alladin,(2009),The joint impact of brand value and advertising on corporate financial performance and on stock return, Walden University.