The Effect of Advertising Expenditures on the Intangible Capital Aspect: Sample Firms of US Leading Advertisers

This paper intends to investigate the “intangible capital aspect” of advertising as well as the long-lived effect of advertising. The paper starts with the definition of “intangible capital aspect” of advertising and the explanation why the present topic is worthwhile for the research. To offer a general research background, it also provides several important references concerned with the study. The research employs two regression models in which the first one focuses on the relationship between the market value and the advertising expenditure by using a sample firms from the 100 US Leading Advertisers during the period 2004 to 2006. Through the research findings, it is believed that the effect of advertising expenditure on the market value is positive and significant. The second regression model suggests that advertising could possibly bring long-lived effect on firms although there is lack of strong evidence to support the point. Key words: Advertising expenditure; Intangible capital aspect; US leading advertiser