The effect of Advertising on the Profitability of Iranian Textiles

Abstract

Abstract The main purpose of this paper is to examine the impact of Advertising Expenditures on the Profitability in the Iranian Textiles (textiles, garments, bags and leather) Industries. The data of the industrial workplaces with 10 employees or more activating in this industry during 1374:1-1386:4 is used. The relationship between the named variables is reveres U, based on the theory, and then the nonlinear econometric model, LSTR (logistic smooth transition autoregressive) is applied. The results of this study show that there are a nonlinear correlation between advertising and profitability in the textiles industries in Iran. The result of estimated model shows that resultant effect of advertising on this period profitability is positive and significant. Non-linear relationship between these two variables represents that there is an optimal range of advertising expenditure that maximizes the Iranian textiles industries Profitability. JEL Classification: C22:L25:M3 Key Words: Advertising, Profitability, logistic smooth transition autoregressive, Iranian Textiles Industries

Keywords

• Advertising
• Profitability
• logistic smooth transition autoregressive
• Iranian Textiles Industries