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More on intangibles: Do stockholders benefit from brand values?

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  • Chehab, Adham
  • Liu, Jeanny
  • Xiao, Yibo

Abstract

This paper analyzes the relationship between brand value and short and long-run stock performance. An equally-weighted portfolio of the American non-financial companies recognized by Interbrand as part of the 100 most valuable global brands earned an eleven-day cumulative abnormal returns (CARs) of 0.54% (17.79% annually) and a three-day CARS of 0.31% (37.97% annually) from 2001 through 2012. The four-factor monthly alpha averaged 1.1428% (13.7136% annually) over the risk-free rate and 1.3317% (15.9804% annually) over the S&P 500 index. Regression results show that the companies' brand values and capitalization were significant contributors to CARS. In addition, the average buy-and-hold return for a portfolio with annual rebalancing to include the recognized companies the preceding year was 15.29%. The annually rebalanced portfolio outperformed the industry average by 3.45% and the S&P 500 by 8.99%. All the above mentioned returns were significant at the 1% level. However, the data shows that consumer reaction to brand ranking is positive but not significant.

Suggested Citation

  • Chehab, Adham & Liu, Jeanny & Xiao, Yibo, 2016. "More on intangibles: Do stockholders benefit from brand values?," Global Finance Journal, Elsevier, vol. 30(C), pages 1-9.
    • Handle: RePEc:eee:glofin:v:30:y:2016:i:c:p:1-9
    DOI: 10.1016/j.gfj.2015.12.001
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    References listed on IDEAS

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    1. Johansson, Johny K. & Dimofte, Claudiu V. & Mazvancheryl, Sanal K., 2012. "The performance of global brands in the 2008 financial crisis: A test of two brand value measures," International Journal of Research in Marketing, Elsevier, vol. 29(3), pages 235-245.
    2. Feng Jui Hsu & Tsai Yi Wang & Mu Yen Chen, 2013. "The Impact of Brand Value on Financial Performance," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 3(6), pages 1-9.
    3. Edmans, Alex, 2011. "Does the stock market fully value intangibles? Employee satisfaction and equity prices," Journal of Financial Economics, Elsevier, vol. 101(3), pages 621-640, September.
    4. Carol J. Simon & Mary W. Sullivan, 1993. "The Measurement and Determinants of Brand Equity: A Financial Approach," Marketing Science, INFORMS, vol. 12(1), pages 28-52.
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    Cited by:

    1. Rajesh Kumar Bhaskaran & Koyilathumpaday Sukumaran Sujit & Kareem Abdul Waheed, 2023. "Linkage Between Brand Value and Firm Performance: An Empirical Examination Using Fuzzy Set Qualitative Comparative Analysis," SAGE Open, , vol. 13(3), pages 21582440231, August.
    2. Khuram Shafi & Zartashia Hameed & Usama Qadri & Samina Nawab, 2018. "Exploration of Global Brand Value Announcements and Market Reaction," Administrative Sciences, MDPI, vol. 8(3), pages 1-11, August.
    3. Saba Resnik & Mateja Kos Koklič, 2018. "User-Generated Tweets about Global Green Brands: A Sentiment Analysis Approach," Tržište/Market, Faculty of Economics and Business, University of Zagreb, vol. 30(2), pages 125-145.
    4. Orhan Emre Elma & Željko Stević & Mahmut Baydaş, 2024. "An Alternative Sensitivity Analysis for the Evaluation of MCDA Applications: The Significance of Brand Value in the Comparative Financial Performance Analysis of BIST High-End Companies," Mathematics, MDPI, vol. 12(4), pages 1-24, February.

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    More about this item

    Keywords

    Intangibles; Market efficiency; Brand value;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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