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The Impact of Brand Value on Financial Performance

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  • Feng Jui Hsu
  • Tsai Yi Wang
  • Mu Yen Chen

Abstract

This paper examines the relationship between brand value and stock performance of companies by using the historical stock performance of global brand stocks to test whether strong brands outperform the market index. A company is considered a brand stock if it is included in the annually published Interbrand Global Top 100 Brands ranking list. We investigate whether numeric brand values assigned by Interbrand have an effect on the brand portfolio return and the possible short-term announcement effects around the time of the survey’s publication, and longer-term returns for companies. The conclusions are summarized as follows: The finding indicates that brand portfolio outperforms S&P index in various holding periods. Brand portfolio generates a significantly positive risk adjusted alpha. This result is in line with prior research results. The brand portfolios have the ability of selecting proper stocks. There are positive evidences that market reaction to a firm’s presence in the top firms that are made public, and that investors of the stock of such firms earn abnormal returns during an announcement window. After evaluate the empirical specification based on both CARs and BHARs, the abnormal returns still exist during the announcement window.

Suggested Citation

  • 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.
  • Handle: RePEc:spt:admaec:v:3:y:2013:i:6:f:3_6_9
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    Cited by:

    1. 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.
    2. Jaroslav Bukovina, 2017. "The attention of a society towards corporate brand name and its determinants within the information-rich economy," MENDELU Working Papers in Business and Economics 2017-71, Mendel University in Brno, Faculty of Business and Economics.
    3. Yhlas SOVBETOV, 2016. "Impact of Brand Dynamics on Insurance Premiums in Turkey," Turkish Economic Review, KSP Journals, vol. 3(3), pages 453-465, September.

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