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
Date Written: September 11, 2015
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
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