The Impact of Marketing Expenditure on Firm Value: A Sectoral Analysis of the Stock Market Response to Branding Investments

Abstract

This study investigates the relationship between marketing expenditure—particularly in branding and advertising—and firm value, as reflected in stock market performance. Drawing on financial and marketing data from 30 publicly listed companies across the consumer goods, technology, and financial services sectors, the paper evaluates how investors respond to varying levels of marketing investment. The analysis spans five years (2019–2023), using regression techniques to assess the impact of marketing intensity (measured as a percentage of revenue) on stock returns and price-to-earnings ratios. Findings suggest a positive correlation between branding investments and firm valuation in consumer-driven sectors, while the relationship is less significant in finance-dominated industries. The paper offers implications for corporate finance and marketing strategy, emphasizing the importance of aligning investor expectations with marketing narratives. The results suggest that marketing should not be viewed solely as an operational cost but as a strategic investment that can drive long-term shareholder value