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

South Asian Journal of Management, 2018, 25(3), July - September, 7-31

Posted: 1 Oct 2019

See all articles by Manoj Anand

Manoj Anand

Management Development Institute

Jagandeep Singh

UIAMS, Panjab University, Chandigarh

Karan Gandhi

University Business School

Date Written: December 20, 2018

Abstract

Discretionary expenses: R&D, advertisement, and training & 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 long-term 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 favourably 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, Discretionay Expenses, Research and Development expenses, Firm Value

Suggested Citation

Anand, Manoj and Singh, Jagandeep and Gandhi, Karan, An Empirical Study on the Relevance of Advertising, Sales Promotion, R&D, and Training and Development Expenses on Firm Value in the Indian Context (December 20, 2018). South Asian Journal of Management, 2018, 25(3), July - September, 7-31, Available at SSRN: https://ssrn.com/abstract=3304420

Manoj Anand (Contact Author)

Management Development Institute ( email )

Gurugram, Haryana 122001
India

Jagandeep Singh

UIAMS, Panjab University, Chandigarh ( email )

Karan Gandhi

University Business School ( email )

Arts Block III
Panjab University
Chandigarh, CA Chandigarh 160014
India

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