THE IMPACT OF MARKETING EFFORTS ON FIRM FINANCIAL PERFORMANCE: A RESEARCH ON COMPANIES IN BIST SERVICES INDEX

Abstract

From an accounting perspective, marketing expenses can be considered as a factor that reduces company profitability. From a financial point of view, funds allo cated to marketing cause a decrease in the funds allocated to other investments. However, business management should be considered broadly, and on that point, spending on marketing efforts should be seen as investments that are expected to increase the value and profitability of the company. In this respect, the purpose of this study is to investigate the impact of marketing efforts on the financial perfor mance of listed companies in Borsa Istanbul (BIST). The scope of the study consists of 66 companies included in the BIST Services Index (XUHIZ) between 2016-2019. To determine this effect, six econometric models were established, and panel data analysis method was chosen as the analysis method. Marketing expenditures to total sales (MTS) and Marketing expenditures to operating expenditures (MTOE) were used as proxies for marketing efforts. Return on Assets (ROA) as indicator of firm profitability and Tobin's Q as indicator of the firm market value were used as firm performance proxies based on previous academic research in this field. Consistent with the literature, various control variables were also included in the models. Ac cording to the research findings, it has been determined that the increase in the ratio of the financial value of marketing efforts to sales does not have a positive effect on the market value or profitability of the company. On the other hand, it was deter mined that the increase in the ratio of marketing expenses to total operating expenses positively affected both the profitability and market value of the company. These findings obtained in the study show that marketing expenses should not be consid ered separately from other operating expenses of the company, companies that can control other operating expenses and increase the share of marketing expenses in total expenses can achieve better financial performance