Research On The Effect Of Advertising And R&D Expenditure On Financial Performance In Listed Companies

With the development of science and technology, the globalization have contributed to the vigorous development of China’s economy. But at the same time, with the liberalization of trade, China’s enterprises are facing fierce competition around the world. Advertising and R&D expenditure are two types of investment of forming enterprises’intangible assets and improving enterprise competitiveness. Advertising can increase the awareness of the enterprise, and R&D investment can promote technology innovation, both expenditure are helpful for enterprises to gain competitive advantage,and is of great significance to enterprise’s survival and development. However, compared to the developed countries, advertising and R&D expenditure in Chinese enterprises are lack of attention,besides,the two kind of expenditure is insufficient and of poor quality. In this context, it’s very necessary to consider the relationship of listed companies advertising spending,R&D expenditure and financial performance thoroughly.The content and framework of this paper are as follows:the first chapter is an introduction which introduced the research background and significance of the paper, and then reviewed relevant research status and bring the research ideas, methods and innovation points and shortcomings of the paper. The second chapter includes concepts and theoretical studies, which defines the concepts related to advertising,R&D and performance, introduces differentiation strategy theory, innovation and diffusion of innovation theory, core competition theory, and finally, introduced the related theory of performance evaluation. The third chapter introduced the overall situation of advertising and R&D in China, and analyzed the situation of advertising and R&D expenditures in the study sample by descriptive statistical method. And finally analyzed the mechanisms of action about how advertising and R&D to affect financial performance. The forth chapter is analysis of empirical study. Choosing the sample and relevant variables, and establish multiple regression model to analyze the data. The fifth chapter is the conclusion of the study, policy recommendations and research prospects are prospected on the basis of the above study.The innovation and characteristics of this paper is that it combined with the theory of differentiation strategy, innovation and diffusion of innovation theory, core competition theory, and made a systematic study of the effect of advertising and R&D expenditure on financial performance.Many scholars have studied on the effects of advertising expenditure on the financial performance and the effects of R&D expenditure on the financial performance respectively,but the combination of advertising and R&D expenditure’s research is rare. In addition, many such scholars only consider the two aspects of corporate profitability and growth ability, ignoring the quality of assets and debt risk status, of which research is not comprehensive and thorough. This paper focuses on the relationship between advertising expenditure,R&D expenditure and financial performance, combined with the specific data on the basis of theories, analyze the effect of the two kinds of expenditure on financial performance from profitability, asset quality, debt risk and business growth four aspects.Finally,it put forward the countermeasures for advertising and R&D expenditure decision-making.