Determinants of Financial Performance in Advertising and Marketing Companies: Evidence from Central and Eastern European Countries

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

Unfortunately, I cannot accept this article for publication in a journal. Although the paper looks good, it has some major flaws. First, it does not make a significant contribution because these financial variables have been tested many times in different contexts and industries in previous papers. How these results can be used is useless to the marketing industry.

The research has another fundamental problem, which is generalizability. The results show that this significance may result from chance in terms of countries and the use of different proxies. When we examine several variables, the results do not differ by changing the variable or the country. In practice, this research shows that the results are random because no matter what theory is chosen, it cannot explain them. After all, they are not homogeneous.

On the other hand, it has shown itself between different countries and between different companies. Also, with the Hausman test and the Pagan method, there is no homogeneity between different periods. However, in the end, it used a homogeneous model for its work that did not consider the year's results, industry, company, and country at all. The bottom line is that the results show that the relationship between the dependent and independent variables is obtained by rolling dice.

Author Response

We express our sincere gratitude for the time and attention you have given to our research, and we would like to provide some comments on your observations:

Comments 1. Unfortunately, I cannot accept this article for publication in a journal. Although the paper looks good, it has some major flaws. First, it does not make a significant contribution because these financial variables have been tested many times in different contexts and industries in previous papers. How these results can be used is useless to the marketing industry.

Response 1. Thank you for your thorough review and valuable feedback. We appreciate the opportunity to address your concerns regarding the contribution and practical value of our research. While financial variables have indeed been studied before, our research provides the first comprehensive cross-country analysis of financial performance determinants specifically in the advertising and marketing sector across CEE countries. This regional focus reveals important variations in how financial indicators affect performance across different markets. Our findings challenge some established assumptions from previous research, particularly in the Polish market, where financial indicators show the most comprehensive impact across all performance metrics. As for the practical value to the marketing industry, our findings provide specific guidance on financial management strategies tailored to each CEE market. For example, Polish companies can benefit from more aggressive debt financing, while Czech companies should adopt more conservative approaches. This is particularly valuable for international marketing agencies operating across multiple CEE countries and helps stakeholders better understand market-specific risks and opportunities.

Comments 2. The research has another fundamental problem, which is generalizability. The results show that this significance may result from chance in terms of countries and the use of different proxies. When we examine several variables, the results do not differ by changing the variable or the country. In practice, this research shows that the results are random because no matter what theory is chosen, it cannot explain them. After all, they are not homogeneous.

Response 2. Thank you for raising this important point about the heterogeneity of our results across countries. However, we respectfully disagree that this heterogeneity indicates randomness. Instead, it reveals meaningful patterns that reflect real differences in business environments across CEE markets. We found consistent patterns where they should exist. For example, Total Asset Turnover (TAT) shows a significant positive impact on ROA and ROE across all countries, confirming the fundamental importance of asset efficiency regardless of market context. The differences we found are economically meaningful and align with market characteristics: Polish companies show comprehensive sensitivity to financial indicators (CR, DE, TAT), reflecting a more mature market; Czech companies demonstrate negative effects of debt financing (DE), suggesting different risk preferences; Ukrainian and Slovak companies show similar patterns in several metrics, indicating comparable market conditions. The heterogeneity in our results actually supports existing theories about emerging markets, where institutional differences lead to varying effectiveness of financial strategies. Our findings contribute to understanding how these differences manifest in the advertising and marketing sector specifically. We would be happy to strengthen the theoretical foundation of our discussion to better explain these country-specific patterns. The variations we found are not random but reflect meaningful differences in market maturity, institutional frameworks, and business practices across CEE countries.

Comments 3. On the other hand, it has shown itself between different countries and between different companies. Also, with the Hausman test and the Pagan method, there is no homogeneity between different periods. However, in the end, it used a homogeneous model for its work that did not consider the year's results, industry, company, and country at all. The bottom line is that the results show that the relationship between the dependent and independent variables is obtained by rolling dice.

Response 3. Thank you for your methodological concerns. We would like to clarify our analytical approach. Our methodology specifically addresses heterogeneity through several steps: We employed the LAD (least absolute deviation) method precisely because it is robust to heterogeneity and outliers. As shown in Table 6, LAD demonstrated better information criteria values than FEM/REM in 10 out of 12 models. The heterogeneity you mentioned was explicitly tested and addressed in our analysis: Breusch-Pagan test confirmed the presence of individual effects; Hausman test guided our choice between FEM and REM; Wooldridge test checked for autocorrelation; We used robust estimation methods to address heteroscedasticity. The results are not random but statistically significant and methodologically sound. The coefficients show clear patterns, such as the consistent positive effect of TAT across all countries for ROA and ROE, with p-values at the 1% significance level. We would be happy to provide additional robustness checks or alternative specifications if you think they would strengthen the analysis.

Reviewer 2 Report

Comments and Suggestions for Authors

Overall, the study provides valuable insights into the CEE region's financial determinants of advertising and marketing companies. It highlights the need for a nuanced understanding of how financial ratios interact with country-specific economic and institutional factors. The findings have practical implications for managers, investors, and policymakers, as they offer guidance for optimizing financial strategies in this competitive and rapidly evolving industry. The study contributes to the literature by shedding light on an understudied sector and emphasizing the importance of regional context in financial performance assessments. However, some shortcomings require the authors' consideration. My comments are as follows:

1. The abstract should be expanded to emphasize the study’s novelty and contributions, along with more detailed methodological aspects.
2. Given the research title, more specific results should be included in the abstract.
3. The introduction begins by discussing the characteristics of advertising and marketing companies. How does your study address these characteristics?
4. How does the conclusion of the first paragraph in the introduction (its final sentence) relate to your research objective?
5. The second paragraph of the introduction does not effectively justify the importance of the study or the selection of CEE countries. Using more up-to-date references, particularly in the latter half of this paragraph, is recommended.
6. The final paragraph of the introduction is not well-positioned. Additionally, it claims that the study’s findings are relevant to different countries. You should demonstrate in the conclusion section how your results can be generalized.
7. I do not understand the rationale for subsection 2.1 in the literature review. It seems more appropriate to discuss the importance of CEE countries in the introduction.
8. The point made at the end of the last paragraph in subsection 2.2 is the same issue I previously mentioned. The conclusion section should explicitly address this matter.
9. The final sentence of Section 2 (lines 301–305) is unclear. Clearly articulate the identified research gap and discuss its significance.
10. Regarding the study sample, did you include all companies with complete data, or was a subset selected from them?
11. I could not find a clear explanation in the manuscript for excluding small and medium-sized enterprises.
12. To enhance readability, the vertical axis scale should be consistent across the charts in Figure 1.
13. The discussion section should elaborate on the diverse nature of business environments within the CEE region.
14. Some tables (e.g., Table 8) appear disorganized, making them difficult for readers to interpret.
15. The managerial implications of your study should be presented in a separate section.
16. In the final section of the manuscript, discuss the study’s limitations and suggest directions for future research.
17. The manuscript contains numerous outdated references. Please update them where possible.

Author Response

We express our sincere gratitude for the time and attention given to our study and provide some comments on your observations (corrections according to the reviewer's recommendations have been made and highlighted in yellow in the text of the article).

Comments 1: The abstract should be expanded to emphasize the study’s novelty and contributions, along with more detailed methodological aspects.

Response 1: The abstract has been expanded according to the reviewer’s recommendations, including the indication of the novelty and contributions of the authors.

Comments 2: Given the research title, more specific results should be included in the abstract.

Response 2: The abstract has been expanded according to the reviewer’s recommendations.

Comments 3: The introduction begins by discussing the characteristics of advertising and marketing companies. How does your study address these characteristics?

Response 3: The introduction includes explanations about the relationships between the industry characteristics and the selected independent, dependent, and control variables of the models.

Comments 4: How does the conclusion of the first paragraph in the introduction (its final sentence) relate to your research objective?

Response 4: The last sentence has been removed as per the reviewer’s recommendations.

Comments 5: The second paragraph of the introduction does not effectively justify the importance of the study or the selection of CEE countries. Using more up-to-date references, particularly in the latter half of this paragraph, is recommended.

Response 5: The introduction has been expanded as per the reviewer’s recommendations, particularly in the latter half of this paragraph, is recommended.

Comments 6: The final paragraph of the introduction is not well-positioned. Additionally, it claims that the study’s findings are relevant to different countries. You should demonstrate in the conclusion section how your results can be generalized. Response 6: Corrected as per the reviewer’s comments.

Comments 7: I do not understand the rationale for subsection 2.1 in the literature review. It seems more appropriate to discuss the importance of CEE countries in the introduction.

Response 7: The expediency of highlighting this subsection was due to the need to consider cross-country analysis in order to understand the logic of such an approach and the analysis of the results obtained by the authors.

Comments 8: The point made at the end of the last paragraph in subsection 2.2 is the same issue I previously mentioned. The conclusion section should explicitly address this matter.

Response 8: Differences in research results are observed in detail in the discussion section. If necessary, we can duplicate them in the conclusions.

Comments 9: The final sentence of Section 2 (lines 301–305) is unclear. Clearly articulate the identified research gap and discuss its significance.

Response 9: The text has been corrected according to the reviewer's comment.

Comments 10. Regarding the study sample, did you include all companies with complete data, or was a subset selected from them?

Response 10: Information has been added to the text of the article according to the reviewer's comment (3.1.Sampling).

Comments 11: I could not find a clear explanation in the manuscript for excluding small and medium-sized enterprises.

Response 11: Medium-sized companies were included in the study sample. The exclusion of small companies was due to the lack of data for calculations for most companies, information about which has been added to the article (3.1.Sampling).

Comments 12: To enhance readability, the vertical axis scale should be consistent across the charts in Figure 1.

Response 12: Figure 1 will be aligned during final technical editing of the article before printing.

Comments 13: The discussion section should elaborate on the diverse nature of business environments within the CEE region.

Response 13: Discussion expanded as per reviewer’s comments.

Comments 14: Some tables (e.g., Table 8) appear disorganized, making them difficult for readers to interpret.

Response 14: Tables 8,9,10 were corrected as per reviewer’s comments.

Comments 15: The managerial implications of your study should be presented in a separate section.

Response 15: Information added as per reviewer’s comments (penultimate paragraph of discussion) to the text of the article.

Comments 16: In the final section of the manuscript, discuss the study’s limitations and suggest directions for future research.

Response 16: Limitations are described at the end of the discussion. Suggestions for further research are added after the limitations.

Comments 17. The manuscript contains numerous outdated references. Please update them where possible.

Response 17: Corrected in accordance with the reviewer's comments.

Reviewer 3 Report

Comments and Suggestions for Authors

What are the key determinants of financial performance for advertising and marketing companies in Central and Eastern European countries, and how do market-specific factors such as digital transformation, regional economic conditions, and competitive dynamics influence their profitability and growth

The author should cite the figure and table in your paper content.

Author research should follow the recent year and also compare your results with recent articles.

A larger number of references should be added to your article.

The authors should clearly mention the challenges in the abstract. Mention a few recent techniques, highlight the challenges faced by the systems, and then present the proposed objective. Objectives and challenges are quite different from each other.

The acronym placed in the keyword should be in expanded form.

Measure the performance of the proposed model with various parameters and discuss the observations in detail.

A comparative analysis of the proposed model and existing techniques can be included for better validation.

Give some advantages and include them in your work.

Give some disadvantages that you should include in your work.

Give future scope to include in your work.

Comments on the Quality of English Language

The originality of the work is satisfied.

The technical quality of the paper is satisfactory.

Formatting and presentation are satisfied.

Author Response

We express our sincere gratitude for the time and attention given to our research and provide some comments on your observations and recommendations:

Comments 1: What are the key determinants of financial performance for advertising and marketing companies in Central and Eastern European countries, and how do market-specific factors such as digital transformation, regional economic conditions, and competitive dynamics influence their profitability and growth?

Response 1: The list of factors investigated in the article is given in Table 1. The influence of digital transformation, regional economic conditions, and competitive dynamics influence was not the direct object of our research.

Comments 2: The author should cite the figure and table in your paper content. Corrected according to the reviewer's comments.
Response 2: Author research should follow the recent year and also compare your results with recent articles. In the process of writing the article, the latest available information from the Orbis database (2021-2023 years) was used.

Comments 3: A larger number of references should be added to your article.

Response 3: Corrected following the reviewer's comments, in particular new references added.

Comments 4: The authors should clearly mention the challenges in the abstract. Mention a few recent techniques, highlight the challenges faced by the systems, and then present the proposed objective. Objectives and challenges are quite different from each other.

Response 4: Corrected in accordance with the reviewer's comments.

Comments 5: The acronym placed in the keyword should be in expanded form.

Response 5: Corrected in accordance with the reviewer's comments.

Comments 6: Measure the performance of the proposed model with various parameters and discuss the observations in detail. Response 6: The evaluation and selection of the model was based on the use of various tests (the Breusch-Pagan test, the Hausman test, the Wooldridge test) and is described in detail in section 4.3. Model Selection.

Comments 7: A comparative analysis of the proposed model and existing techniques can be included for better validation.

Response 7: The study includes a comprehensive comparative analysis and validation of the modeling approach in several key ways (Model Selection Process, Comparative Model Evaluation, Robustness Check).

Comments 8. Give some advantages and include them in your work. Give some disadvantages that you should include in your work.

Response 8: The advantages and disadvantages of the study according to the reviewer's comments are included in the discussion section, in particular through practical implications and limitations.

Comments 9: Give future scope to include in your work.

Response 9: Corrected according to the reviewer's comments (last sentence of discussion).

Reviewer 4 Report

Comments and Suggestions for Authors

.

Round 2

Reviewer 1 Report

Comments and Suggestions for Authors

While thanking the authors for their explanations, I was unfortunately not convinced by them and continue to emphasize the shortcomings of the paper.

Reviewer 2 Report

Comments and Suggestions for Authors

Congratulations to the authors.

Reviewer 3 Report

Comments and Suggestions for Authors

Accept with its current form

Comments on the Quality of English Language

The English could be improved to more clearly express the research.