Brand equity and the Covid-19 stock market crash: Evidence from U.S. listed firms

Abstract

Brand equity has played an important role in firms’ stock performance, especially during the stock market crash provoked by Covid-19. Our manuscript investigates how brand equity impacts stock performance during the Covid-19 crash. Firms with top brands should be a particularly attractive "safe harbor" in the crash to investors since consumer loyalty and demand advantages brought by brand equity enable firms to retain stable cash flows and mitigate the macroeconomic shock. Based on U.S. listed firms, we find that firms with top brands experience higher stock returns, lower systematic risk and lower idiosyncratic risk in the Covid-19 crash than other firms. Moreover, our findings are used to distinguish the brand equity effect from the corporate social responsibility (CSR) effect on stock performance during the Covid-19 crash.