The effect of marketing and R&D expenditures on firm profitability and stock return: Evidence from BIST

Gamze Sekeroglu; Kazım  Karaboga

doi:10.11121/ijocta.2023.1238

Authors

Gamze Sekeroglu Department of International Trade and Finance, Selcuk University, Turkey https://orcid.org/0000-0003-2280-6470
Kazım Karaboga Department of Management Information Systems, Necmettin Erbakan University, Turkey https://orcid.org/0000-0002-4365-1714

DOI:

https://doi.org/10.11121/ijocta.2023.1238

Keywords:

R&D Expenditures, Marketing Expenditures, Panel-Data Analysis, Stock Return, Profitability

Abstract

This study aims to determine the effects of R&D and marketing expenditures of companies that force marketing and finance to act together on stock return, return on assets, and return on equity. To this end, the quarterly frequency data of nine companies that were continuously traded in the BIST Technology Index between March 2009 and December 2020 were examined with panel-data analysis. In line with the purpose of the research, analyzes were carried out in three different models. First of all, we determined which tests should be performed on the models based on the cross-sectional dependence, homogeneity/heterogeneity, and panel unit root test results obtained for the established models. The results of panel least squares test carried out to determine the effect of R&D and marketing expenditures on stock return showed that the effect of R&D expenditures on stock return was not statistically significant while marketing expenditures had a positive and significant effect on stock return. Analyzes should be continued with cointegration tests according to the characteristics of the two models established to determine the effect of R&D and marketing expenditures on return on assets and return on equity. The results implied a positive and significant relationship between R&D expenditures and return on both assets and equity. While no statistically significant relationship was found between marketing expenditures and return on assets, there was a positive and significant relationship between marketing expenditures and return on equity.

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Author Biographies

Gamze Sekeroglu, Department of International Trade and Finance, Selcuk University, Turkey

Gamze ŞEKEROĞLU is an Associate Professor at Selcuk University, Faculty of Economics and Administrative Sciences, Department of International Trade and Finance. Having completed her undergraduate degree in business administration, Şekeroğlu completed her graduate and PhD degrees in the field of finance. She was deemed worthy of an award by the Economic Research Foundation for her PhD thesis. She has many studies on financial mathematics, markets and institutions, financial risk management, investments and portfolio management.

Kazım Karaboga, Department of Management Information Systems, Necmettin Erbakan University, Turkey

Kazım KARABOĞA is an Associate Professor of the Department of Management Information Systems at Necmettin Erbakan University where he also works as the Director of Corporate Quality Development and Accreditation Coordinatorship and the vice-chair of Department of Management Information Systems. He also serves as a consultant at the Higher Education Quality Council of Turkey (THEQC). He received his master's degree from Marmara University (2011) and his PhD from Selcuk University (2016) in Business Administration. During his education, he worked on the preparation of the strategic plan of Selcuk University (2012) and Konya Teknokent (2015). His research interests include “strategic management, higher education management, performance management, marketing research, research methods, quality management, statistical and econometric models”.

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