Skip to main content
SpringerLink
Log in

The impact of brand value on firm valuation: The moderating influence of firm type

  • Original Article
  • Published:
Journal of Brand Management Aims and scope Submit manuscript

Abstract

The efficient markets hypothesis suggests that the stock price of a firm reflects investor perceptions of the current and future earnings potential of all of its assets, both tangible and intangible. Brand value can be viewed as an intangible firm asset and research suggests brand value impacts stock prices. However, the effect of branding on consumers differs from its effect on organizational buyers. In this study, brand valuation estimates are found to be significantly associated with share prices above and beyond book value and earnings information. However, this relationship is moderated by firm type, and, although the association of brand value and stock prices is significant for consumer firms, it is not significant for industrial firms. Brand valuation associations with stock prices are found to be significant both on a contemporaneous basis and on a 1-year time-lagged basis, suggesting brand value changes have a durable effect on firm valuation. The implications for industrial and consumer branding strategies and research are discussed.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Aaker, D.A. (1992) The value of brand equity. The Journal of Business Strategy 13 (4): 27.

    Article  Google Scholar 

  • Aaker, D.A. and Jacobson, R. (1994) The financial information content of perceived quality. Journal of Marketing Research 31 (2): 191.

    Article  Google Scholar 

  • Aaker, D.A. and Jacobson, R. (2001) The value relevance of brand attitude in high-technology markets. Journal of Marketing Research 38 (4): 485–493.

    Article  Google Scholar 

  • Ailawadi, K., Lehmann, D. and Neslin, S. (2003) Revenue premium as an outcome measure of brand equity. Journal of Marketing 67 (4): 1–17.

    Article  Google Scholar 

  • Aker, D.A. (2004) Brand Portfolio Strategy: Creating Relevance, Differentiation, Energy, Leverage, and Clarity. New York: Free Press.

    Google Scholar 

  • Arjun, C. and Morris, B.H. (2001) The chain of effects from brand trust and brand affect to brand performance: The role of brand loyalty. Journal of Marketing 65 (2): 81.

    Article  Google Scholar 

  • Bahadir, S.C., Bharadwaj, S.G. and Srivastava, R.K. (2008) Financial value of brands in mergers and acquisitions: Is value in the eye of the beholder? Journal of Marketing 72 (6): 49–64.

    Article  Google Scholar 

  • Barth, M., Clement, M., Foster, G. and Kaszink, R. (1998) Brand values and capital market valuation. Review of Accounting Studies 3 (1–2): 41–68.

    Article  Google Scholar 

  • Bendixen, M., Bukasa, K.A. and Abratt, R. (2004) Brand equity in the business-to-business market. Industrial Marketing Management 33 (5): 371–380.

    Article  Google Scholar 

  • Chaudhuri, A. and Holbrook, M.B. (2001) The chain of effects from brand trust and brand affect to brand performance: The role of brand loyalty. Journal of Marketing 65 (2): 81–93.

    Article  Google Scholar 

  • Fama, E.F. (1970) Efficient capital markets: A review of theory and empirical work. The Journal of Finance 25 (2): 383–417.

    Article  Google Scholar 

  • Fama, E.F. (1991) Efficient capital markets: II. Journal of Finance 46 (5): 1575–1617.

    Article  Google Scholar 

  • Fehle, F., Fournier, S.M., Madden, T.J. and Shrider, D.G. (2008) Brand value and asset pricing. Quarterly Journal of Finance and Accounting 47 (1): 3.

    Google Scholar 

  • Fornell, C., Mithas, S., Morgeson Iii, F.V. and Krishnan, M.S. (2006) Customer satisfaction and stock prices: High returns, low risk. Journal of Marketing 70 (1): 3–14.

    Article  Google Scholar 

  • Gromark, J. and Melina, F. (2011) The underlying dimensions of brand orientation and its impact on financial performance. Journal of Brand Management 18 (6): 394–410.

    Article  Google Scholar 

  • Gupta, S. and Zeithaml, V. (2006) Customer metrics and their impact on financial performance. Marketing Science 25 (6): 718–739.

    Article  Google Scholar 

  • Hupp, O. and Powaga, K. (2004) Using consumer attitudes to value brands: Evaluation of the financial value of brands. Journal of Advertising Research 44 (03): 225–231.

    Article  Google Scholar 

  • Hutton, J.G. (1997) A study of brand equity in an organizational-buying context. Journal of Product & Brand Management 6 (6): 428.

    Article  Google Scholar 

  • Interbrand Corporation. (2011) Interbrand best global brands 2010, http://www.interbrand.com/en/best-global-brands/best-global-brands-2008/best-global-brands-2010.aspx, accessed 6 May 2011.

  • Juntunen, M., Juntunen, J. and Juga, J. (2011) Corporate brand equity and loyalty in B2B markets: A study among logistics service purchasers. Journal of Brand Management 18 (4/5): 300–311.

    Article  Google Scholar 

  • Kapareliotis, I. and Panopoulos, A. (2010) The determinants of brand equity: The case of Greek quoted firms. Managerial Finance 36 (3): 225–233.

    Article  Google Scholar 

  • Keller, K.L. (2003) Strategic Brand Management: Building, Measuring, and Managing Brand Equity. Upper Saddle River, NJ: Pearson Education.

    Google Scholar 

  • Kerin, R.A. and Sethuraman, R. (1998) Exploring the brand value-shareholder value nexus for consumer goods companies. Journal of the Academy of Marketing Science 26 (4): 260–273.

    Article  Google Scholar 

  • Krake, F.B.G.J.M. (2005) Successful brand management in SMEs: A new theory and practical hints. The Journal of Product and Brand Management 14 (4/5): 228.

    Article  Google Scholar 

  • Kuhn, K.-A.L., Alpert, F. and Pope, N.K. (2008) An application of Keller's brand equity model in a B2B context. Qualitative Market Research: An International Journal 11 (1): 40–58.

    Article  Google Scholar 

  • Madden, T.J., Fehle, F. and Fournier, S. (2006) Brands matter: An empirical demonstration of the creation of shareholder value through branding. Journal of the Academy of Marketing Science 34 (2): 224.

    Article  Google Scholar 

  • Mizik, N. and Jacobson, R. (2008) The financial value impact of perceptual brand attributes. Journal of Marketing Research 45 (1): 15–32.

    Article  Google Scholar 

  • Pauwels, K., Silva-Risso, J., Srinivasan, S. and Hanssens, D. (2004) New products, sales promotions, and firm value: The case of the automobile industry. Journal of Marketing 68 (4): 142–156.

    Article  Google Scholar 

  • Peters, T.J. (1988) Thriving on Chaos. New York: Alfred A. Knopf.

    Google Scholar 

  • Raggio, R.D. and Leone, R.P. (2007) The theoretical separation of brand equity and brand value: Managerial implications for strategic planning. Journal of Brand Management 14 (5): 380–395.

    Article  Google Scholar 

  • Raggio, R.D. and Leone, R.P. (2008) Chasing brand value: Fully leveraging brand equity to maximise brand value. Journal of Brand Management 16 (4): 248–263.

    Article  Google Scholar 

  • Rao, V.R., Agarwal, M.K. and Dahlhoff, D. (2004) How is manifest branding strategy related to the intangible value of a corporation? The Journal of Marketing 68 (4): 126–141.

    Article  Google Scholar 

  • Rose, S. (1990) The coming revolution in credit cards. Journal of Retail Banking 12 (2): 17–19.

    Google Scholar 

  • Sahay, A. and Pillai, A. (2009) Differential impact of advertising and distribution expenditure on Tobin's Q: A perspective from listed firms in India. Journal of Indian Business Research 1 (2/3): 77–94.

    Article  Google Scholar 

  • Shankar, V., Azar, P. and Fuller, M. (2008) BRAN*EQT: A multicategory brand equity model and its application at allstate. Marketing Science 27 (4): 567–584.

    Article  Google Scholar 

  • Siegel, J. (2005) The Future for Investors. New York: Crown Publishing Group.

    Google Scholar 

  • Simon, C.J. and Sullivan, M.W. (1993) The measurement and determinants of brand equity: A financial approach. Marketing Science 12 (1): 28–52.

    Article  Google Scholar 

  • Sjodin, H. (2007) Financial assessment of brand extensions. The Journal of Brand Management 14 (3): 223–231.

    Article  Google Scholar 

  • Srivastava, R., Shervani, T. and Fahey, L. (1998) Market-based assets and shareholder value: A framework for analysis. Journal of Marketing 62 (1): 2–18.

    Article  Google Scholar 

  • Stahl, F., Heitmann, M., Lehmann, D. and Neslin, S. (2012) The impact of brand equity on customer acquisition, retention, and profit margin. Journal of Marketing 76 (4): 44–63.

    Article  Google Scholar 

  • Treynor, J. (1999) The investment value of brand franchise. Financial Analysts Journal 55 (2): 27.

    Article  Google Scholar 

  • van Riel, A.C.R., Pahud de Mortanges, C. and Streukens, S. (2005) Marketing antecedents of industrial brand equity: An empirical investigation in specialty chemicals. Industrial Marketing Management 34 (8): 841–847.

    Article  Google Scholar 

  • Venkatesan, R. and Kumar, V. (2004) A customer lifetime value framework for customer selection and resource allocation strategy. Journal of Marketing 68 (4): 106–125.

    Article  Google Scholar 

  • Wang, F., Zhang, X.P.S. and Ouyang, M. (2009) Does advertising create sustained firm value? The capitalization of brand intangible. Journal of the Academy of Marketing Science 37 (2): 130–143.

    Article  Google Scholar 

  • Webster, F.E. (1992) The changing role of marketing in the corporation. The Journal of Marketing 56 (4): 1–17.

    Article  Google Scholar 

  • Webster, F.E. and Keller, K.L. (2004) A roadmap for branding in industrial markets. The Journal of Brand Management 11 (5): 388–402.

    Article  Google Scholar 

  • Zipkin, A. (2009) Brand names live after stores close. New York Times, 14 April.

Download references

Author information

Authors and Affiliations

  1. Mount Saint Mary College, 330 Powell Ave, Newburgh, 12550, NY, USA

    Colleen P Kirk, Ipshita Ray & Berry Wilson

Authors
  1. Colleen P Kirk
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Ipshita Ray
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Berry Wilson
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Colleen P Kirk.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Kirk, C., Ray, I. & Wilson, B. The impact of brand value on firm valuation: The moderating influence of firm type. J Brand Manag 20, 488–500 (2013). https://doi.org/10.1057/bm.2012.55

Download citation

  • Received:

  • Revised:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1057/bm.2012.55

Keywords

Search

Navigation