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Value of advertising by food manufacturers as investment in intangible capital
Author(s) -
Wu Qinrong,
Bjornson Bruce
Publication year - 1996
Publication title -
agribusiness
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.57
H-Index - 43
eISSN - 1520-6297
pISSN - 0742-4477
DOI - 10.1002/(sici)1520-6297(199603/04)12:2<147::aid-agr4>3.0.co;2-2
Subject(s) - recession , value (mathematics) , economics , investment (military) , business , brand equity , economic rent , advertising , microeconomics , macroeconomics , computer science , machine learning , politics , political science , law
We use Tobin's q model to investigate the impact of food manufacturers' advertising as an investment in intangible capital. Intangible capital value created by advertising relates to expected growth and economic rents derived from brand equity. We study the relations between advertising and firm value under varying economic and consumer food market conditions from 1973 to 1991. We find that food manufacturing firms' advertising activity is strongly related to intangible capital value during the high value‐added food product proliferation of the 1980s, and during recessions, including the 1990 to 1991 recession when consumers resisted higher margin, branded food products. © 1996 John Wiley & Sons, Inc.