Abstract
Past research has shown a correlation between measures of brand equity and stock price. However, these results are not sufficient to conclude that branding creates shareholder value. Using time-honored models from the discipline of finance, this paper specifies, and subsequently tests, the necessary and sufficient conditions to determine whether brand strength leads to the creation of shareholder value. The results presented extend previous research by showing that strong brands not only deliver greater returns to stockholders versus a relevant market benchmark, they do so with less risk. A reframing of brand research within the framework of risk management is recommended, toward a goal of greater organizational interdependence and accountability for the marketing function as a whole.
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