TITLE:
Impact of Discretionary Expenditures on Profitability during Recession: Evidence from Manufacturing Sector in India
AUTHORS:
K. S. Sujit, B. Rajesh Kumar
KEYWORDS:
R & D Expenses, Advertising Expenses, Interaction Effects, Recession, Profitability
JOURNAL NAME:
Theoretical Economics Letters,
Vol.6 No.3,
June
3,
2016
ABSTRACT: Advertisement and R &
D expenditures are often considered as strategic variables which add value to
the firm. During recession these expenses are often been compromised due to
various reasons by the firms. This sometimes proves out to be costly for the
firms in long run as they fail to catch up even after recession is over. Firms
while taking these decisions often ignore the interaction effect of these
variables with other variables in affecting profitability. This paper aims to
show that Advertisement and R & D activities have moderated other variables
in positively affecting performance especially during recession. Hence, firms
must take into consideration the interaction effects of R & D and advertisement
intensities with other important variables.