Impact of advertisement expenditure on firm’s performance: as evidenced from selected service firms listed on the Ghana Stock Exchange.

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The ever-growing competition in today’s business environment creates dynamic challenges to firms. Today, advertisements are going international at a much faster speed leading to a universal response to advertisement, the forms of advertisement are changing to include electronic advertisement and mobile advertisement to the overall advertisement portfolio of firms. This leads to changes in the costing patterns of advertisement which could lead to a fall in firms’ performance. This thesis examines empirically the effect of advertisement expenditure on the banking firms’ performance in Ghana. Taking data from five commercial banks listed on the Ghana Stock Exchange from 2007 to 2013, sampled out of a possible nine commercial banks listed on the Ghana stock exchange due to the availability of data for the given period, it is shown after data analysis from the five sampled banks that the impact of advertisement expenditure on sales is positive and significant while it has adverse significant effect on return on equity. The study posits that, advertisement intensity has negative and significant effect on profitability. Hence, the study reasons that advertisement expenditure does not cause return on equity to increase as a measure of performance. There is therefore no value added to the shareholders wealth as managers spend on advertisement to promote the banks. It is therefore recommended that firms with low margins might need dissimilar planned marketing mixes than high-margin firms.
A thesis submitted to the Kwame Nkrumah University of Science and Technology in partial fulfillment of the requirement for the award of Master of Business Administration in Strategic Management and Consulting.