Are interaction effects of various media advertising on firm performance super-additive or sub-additive?

Qureshi, Maqsood Iqbal

Abstract

This study empirically investigates how various advertising media independently and jointly affect firms' financial performance. Advertising spending is one of the most significant budget items supporting marketing activities for most companies. However, in an era when media choices have become more numerous, firms remain uncertain about their media selection strategies and allocation of funds across various advertising media. There has been very limited effort to investigate interactive media advertising effects on firm performance and market valuation. Therefore, the primary motivation of this research is to examine individual and combined effects of various media advertising on firms' financial performance This study examines various advertising media's individual as well as interaction effects on firm performance. Accounting data are downloaded from Datastream, except for advertising data. We obtained advertising data from AC Nielsen Meal. The resulting sample has 5165 firm years from 1998 to 2003. To empirically test interactive media advertising effects on firm performance, this study employed a linear regression model in which earnings of firm i in year t, Eit, can be expressed as function of tangible and intangible assets. The results of this research suggest that individually, print and electronic media each have a positive and significant effect on earnings, but each form of media weakens the effectiveness of other respective media. Overall, the results of this study will help firms to make informed decisions to strategically integrate different media to maximize individual and combined effectiveness across all media types.

Citation

QURESHI, M.I. 2021. Are interaction effects of various media advertising on firm performance super-additive or sub-additive? Journal of accounting and management information systems [online], 20(2), pages 290-303. Available from: https://doi.org/10.24818/jamis.2021.02005

• Journal Article Type: Article
• Acceptance Date: Jun 1, 2021
• Online Publication Date: Jun 1, 2021
• Publication Date: Jun 30, 2021
• Deposit Date: Apr 23, 2024
• Publicly Available Date: Jun 11, 2024
• Journal: Journal of Accounting and Management Information Systems
• Print ISSN: 1583-4387
• Electronic ISSN: 2559-6004
• Publisher: Editura ASE
• Peer Reviewed: Peer Reviewed
• Volume: 20
• Issue: 2
• Pages: p290-303
• DOI: https://doi.org/10.24818/jamis.2021.02005
• Keywords: Advertising; Electronic media; Print media; Earnings; Television advertising; Firm performance; Value relevance; Media types; Market value; Super-additive; Sub-additive
• Public URL: https://rgu-repository.worktribe.com/output/2307823