Investigating the Effect of Advertisement Cost on the Financial Performance of the Firms Listed in Tehran Stock Exchange with the Mediating Role of Brand Equity

Considering the fact that consumers are exposed to a lot of goods and services from different suppliers, advertisement is one of the most powerful ways to echo the voice of the firms in such environments. Since advertising is an expensive activity and has a burden on companies’ budgets, managers and shareholders always like to know if it has a rational and significant output regarding their investment and expenditures (they like to know if it has a significant return on investment). This paper, seeking to answer this question of managers and shareholders, has investigated the effect of advertising costs on the financial performance of the firms listed in Tehran Stock Exchange. We used data of 88 firms from 2010-2015 and multivariate regression to analyze this data. Q Tobin is used to measure brand equity. Results show that brand equity has a mediating role in the relationship between advertising costs and financial performance.