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

Kirk, Colleen P.; Ray, Ipshita; Wilson, Berry
June 2013
Journal of Brand Management;Jun2013, Vol. 20 Issue 6, p488
Academic Journal
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 I-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.


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