The Effect of Marketing Expenses on Stock Returns: The Case of ISE Food Industry

In this study, the effect of marketing expenses on stock returns has been studied. According to the generally accepted accounting principles, marketing expenses are a kind of cost and are presented in income statements as an operating expense. On the other hand, in addition to this view, new approaches in finance consider marketing expenses as a value greater than an expense item. Therefore, marketing expenses are taken into account as an investment activity which would create a value for the firm in the future. In the marketing literature, there is a generally accepted view which proposes that marketing expenses are a value-creating activity. Thus, it may be thought that marketing expenses are a kind of investment that has positive effect on firm’s value -not just a cost object. From this point of view, marketing expenses should affect sock returns, since a firm can increase its customer equity, brand equity, and sales through marketing activities. In line with the aim of this study, we investigated the effect of Marketing, Sales and Distribution Expenses on stock returns of firms listed in the ISE Food Sectoral Index by using panel data regression analysis. According to the results, marketing expenses (in the current period) effect stock returns generally positively and there is a concav relationship between the variables.