Abstract：Based on firm marketing expenditure, this study explores advertising’s impact on firm performance and further examines the moderating effects of industry concentration and consumption industry. Based on 1754 listed firms in China, the results show that advertising expenditure do have a significant positive impact on firm performance. Furthermore, the positive impact is sustainable during the next two years after the expenditure and has a small decrease according to the coefficients of the model. At the same time, advertising in discretionary consumption industry seems to be more efficient than daily consumption industry. Industry concentration serves as a moderator in the process and companies in a more competitive industry enjoy a more efficient advertising expenditure, which shows for these firms, advertising is a useful tool to improve performance.
