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Marketing investments and firm performance in manufacturing sector: a panel threshold model for China

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  • Dinesh Jaisinghani
  • Kakali Kanjilal

Abstract

Many firms find it difficult to accurately identify the level of investments in marketing activities that can maximize their profitability. The current work is aimed at helping firms in identifying the optimal level of marketing expenditure. The study has been conducted for 1363 publicly listed firms in China for the period 2008–2017. The current study utilizes threshold panel regression analysis. The study contends that the optimal level of investments in marketing is contingent upon firm’s size. The results confirm the existence of a single threshold value that helps in determining the optimal level of marketing investments. It is found that, for firms that are smaller that the cut-off value of size, high level of investments in marketing is associated with improved firm performance. However, for the firms that are larger than the cut-off value of size, high level of investment in marketing is associated with reduced firm performance.

Suggested Citation

  • Dinesh Jaisinghani & Kakali Kanjilal, 2019. "Marketing investments and firm performance in manufacturing sector: a panel threshold model for China," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 24(1), pages 117-126, January.
    • Handle: RePEc:taf:rjapxx:v:24:y:2019:i:1:p:117-126
    DOI: 10.1080/13547860.2018.1554617
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    Cited by:

    1. Zhao, Shixiu & He, Xiaoyi & Faxritdinovna, Kenjayeva Umriya, 2023. "Does industrial structure changes matter in renewable energy development? Mediating role of green finance development," Renewable Energy, Elsevier, vol. 214(C), pages 350-358.
    2. Chu, Chien Chi & Chang, Chiao Yi & Zhou, Rui Jie, 2021. "The nonlinear connection between 52-week high and announcement effect of insider trading — Evidence from mainland China and Taiwan," Economic Modelling, Elsevier, vol. 94(C), pages 1043-1057.
    3. Cappa, Francesco & Cetrini, Giorgio & Oriani, Raffaele, 2020. "The impact of corporate strategy on capital structure: evidence from Italian listed firms," The Quarterly Review of Economics and Finance, Elsevier, vol. 76(C), pages 379-385.

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