Determinants of Corporate Sponsorship: Evidence From Consumer Product and Services Sector

Abstract

The role of corporate sponsorship as part of the corporate philanthropy of a business has been promoted to ensure the awareness of its products or services. In order to get insights on their motivation, this study investigates the determinants of the corporate sponsorships, specifically the companies’ financial characteristics and marketing intensity in Malaysian consumer products and services industry. Using annual reports, this study examined five largest listed companies in consumer products and services industry from the years 2000 - 2018, which consisted of 95 firm-year observations. Panel data regression analysis was carried out using the panel regression fixed effects model to analyse the effect of companies’ financial characteristics and marketing intensity on corporate sponsorship. Financial characteristics were represented by debt ratio, return on assets, and return on equity while marketing intensity was represented by marketing expenses to total sales. The findings showed insignificant relationships between all variables and corporate sponsorship. The results may suggest that financial characteristics and marketing intensity are not the most important determinants of corporate involvement in sponsorship activities. This research would provide insights for management that, corporate sponsorships are done to promote their products and services and not necessarily have influenced by their financial and marketing agenda.