Advertising, Profits, and Corporate Taxes

The Effects of Research and Development Expenditure on the Firm Value: Focusing on the Portfolio's Excess Return

“…Positions that argue that R&D expenditures are for developing a new technology or imitating and applying the technology developed by the competitor firms so that R&D investment of the firm is not a cost in the term and that utility should be capitalized as an intangible capital that is realized in the future have been suggested by many researchers (Weiss, 1969;Miansian, 1969;Branch, 1974;Grbowski and Mueller, 1978;Hirschey 1982；Chauvin and Hirschey 1993； Sougiannis 1994Lev and Sougiannis 1996). R&D expenditures have effects on the productivity of the firm and contribute to the increase of revenue and profit, and in the market, it is reported that R&D expenditures serve as a positive indication of stock price to investors (Lev, 2001).…”

A Structural Equation Model of the Relationship between Advertising, Profitability and Size

“…Oster (1982), in her study of change in advertising strategies in 19 consumer goods industries, found that advertising increased profits in almost all consumer goods industries. Weiss (1969) investigated the effect that the expensing of advertising has on coefficients in the regression model relating advertising and profitability. He argued that advertising expenditures grow at a constant rate over time and advertising capital should be depreciated over a period of time.…”

“…They maintain that advertising expenditure creates an intangible asset which depreciates over time, so advertising should be treated as capital rather than current expenditure. They adopt an approach based on earlier studies by Comanor and Wilson (1967), Weiss (1969) and Bloch (1974). They argue that there is a positive relationship between the conventional accounting rate of profit and the advertising-sales ratio.…”

'On a Level with Dentists?': Reflections on the Evolution of Industrial Organization

“…In fact, almost all of the variables that are used in inter-industry profitability studies were logically endogenous; they depended to at least some extent on seller conduct (Schmalensee 1989). Moreover, Weiss (1969) and others showed that if advertising spending has durable effects but is expensed (as is conventionally done) rather than being treated as an investment, a positive relation between advertising/sales ratios and accounting profitability could arise as an accounting artifact. By the early 1980s when Fisher and McGowan (1983) launched their powerful assault against the use of accounting measures of profitability to infer monopoly profits, they met little resistance.…”