Synergy between R&D and Advertising on Shareholder Value: Does Firm Size Matter?

Canadian Journal of Administrative Sciences, Forthcoming

Posted: 12 Sep 2015 Last revised: 20 May 2018

See all articles by Chi-Lu (Edward) Peng

Chi-Lu (Edward) Peng

Chung Hua University - Department of Finance; National Sun Yat-sen University

An-Pin Wei

Sun Yat-Sen University (SYSU) - International School of Business and Finance (ISBE)

Miao-Ling Chen

National Sun Yat-sen University - Department of Finance

Date Written: September 11, 2015

Abstract

The main objective of this study is to examine whether R&D, advertising, and the synergy between R&D and advertising influence shareholder value. We further investigate whether firm size moderates the market value effects of R&D, advertising and the synergy effect of R&D and advertising on shareholder value. We find that the R&D and the synergy between R&D and advertising have significantly positive effects on shareholder value. Moreover, we find that the effects of R&D and advertising are significantly higher in large firms than small firms, while the synergy effect is significantly positive in small firms but not in large firms. The results offer important implications for executives for resources allocation on R&D and advertising expenditures to create shareholder value.

Keywords: R&D, Advertising, Shareholder Value, Firm Size, Hierarchical Linear Model

Suggested Citation

Peng, Chi-Lu and Wei, An-Pin and Chen, Miao-Ling, Synergy between R&D and Advertising on Shareholder Value: Does Firm Size Matter? (September 11, 2015). Canadian Journal of Administrative Sciences, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2659018

Chi-Lu Peng (Contact Author)

Chung Hua University - Department of Finance ( email )

No. 707, Sec. 2, WuFu Road
Hsinchu, Taiwan 300
Taiwan

National Sun Yat-sen University ( email )

No.70, Lianhai Rd., Gushan District,
Kaohsiung City
Taiwan

An-Pin Wei

Sun Yat-Sen University (SYSU) - International School of Business and Finance (ISBE) ( email )

China

Miao-Ling Chen

National Sun Yat-sen University - Department of Finance ( email )

No.70, Lianhai Rd., Gushan District,
Kaohsiung City
Taiwan

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