Cyclical vulnerability and resilience in advertising firms: A regional financial perspective

Brenda Vázquez-La Hoz; Jessica Fernández-Vázquez; Aida Galiano; Juan Manuel Martín-Álvarez; Brenda Vázquez-La Hoz; Jessica Fernández-Vázquez; Aida Galiano; Juan Manuel Martín-Álvarez

doi:10.3934/QFE.2026014

Quantitative Finance and Economics

2026, Volume 10, Issue 2: 326-354. doi: 10.3934/QFE.2026014

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Research article

Cyclical vulnerability and resilience in advertising firms: A regional financial perspective

Departments of Quantitative Methods for Economics and Business and Marketing and Market Research, Faculty of Economics and Business, Universidad Internacional de La Rioja, Logroño, Spain

Received: 26 October 2025 Revised: 26 February 2026 Accepted: 01 April 2026 Published: 19 May 2026
JEL Codes: C32, E32, E44, G32, M37, R11

In this paper, we examined how macroeconomic cycles shape the financial outcomes of advertising firms in Spain. Using population-level firm data for all Spanish provinces over 2000–2024, we combined province-level Toda–Yamamoto Granger causality and Hatemi-J asymmetric causality tests with panel-level evidence based on the heterogeneous panel causality framework of Emirmahmutoglu and Kose (2011). All causality specifications incorporated controls for the scale of the local advertising market, including firm-size proxies and aggregate advertising activity. The results revealed strong business-cycle asymmetries and substantial geographical heterogeneity. However, the uneven distribution of statistically significant provincial effects was not random. Ridge-penalized logistic models showed that the probability of observing significant first-stage effects is systematically related to provincial macroeconomic scale and financial structure, and that these determinants differ sharply across business-cycle regimes. During expansions, significant effects concentrate primarily on balance-sheet outcomes (solvency and equity), whereas during recessions, significance shifts to operating-performance outcomes (revenues and EBITDA). Overall, the findings refine the procyclicality debate in advertising by linking cyclical sensitivity to regional macro-financial structures and state-dependent mechanisms governing operating outcomes and balance-sheet resilience.
- advertising firms,
- business cycles,
- macroeconomic shocks,
- solvency and equity,
- marketing communications,
- regional heterogeneity
Citation: Brenda Vázquez-La Hoz, Jessica Fernández-Vázquez, Aida Galiano, Juan Manuel Martín-Álvarez. Cyclical vulnerability and resilience in advertising firms: A regional financial perspective[J]. Quantitative Finance and Economics, 2026, 10(2): 326-354. doi: 10.3934/QFE.2026014

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Abstract

In this paper, we examined how macroeconomic cycles shape the financial outcomes of advertising firms in Spain. Using population-level firm data for all Spanish provinces over 2000–2024, we combined province-level Toda–Yamamoto Granger causality and Hatemi-J asymmetric causality tests with panel-level evidence based on the heterogeneous panel causality framework of Emirmahmutoglu and Kose (2011). All causality specifications incorporated controls for the scale of the local advertising market, including firm-size proxies and aggregate advertising activity. The results revealed strong business-cycle asymmetries and substantial geographical heterogeneity. However, the uneven distribution of statistically significant provincial effects was not random. Ridge-penalized logistic models showed that the probability of observing significant first-stage effects is systematically related to provincial macroeconomic scale and financial structure, and that these determinants differ sharply across business-cycle regimes. During expansions, significant effects concentrate primarily on balance-sheet outcomes (solvency and equity), whereas during recessions, significance shifts to operating-performance outcomes (revenues and EBITDA). Overall, the findings refine the procyclicality debate in advertising by linking cyclical sensitivity to regional macro-financial structures and state-dependent mechanisms governing operating outcomes and balance-sheet resilience.

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