Impact of Advertisement Expenditure on Banks’ Performance in Ghana

The ever- growing competitions in today’s business environment creates dynamic challenges to firm. 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 banks listed on the Ghana Stock Exchange from 2005 to 2013, it is shown that the impact of advertisement intensity on sales is positive and significant while it has adverse significant effect on return on equity. Hence, the Generalized Least Square (GLS) method of estimation was used for the data analysis from the five banks sample out of the nine listed on the Ghana Stock Exchange for the study. The study posits that, advertisement intensity has negative and significant effect on performance. 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 companies.