Do Brands Matter in Unlisted Firms? An Empirical Study of the Association between Brand Equity and Financial Performance

Anne Schmitz,Nieves Villaseñor-Román

doi:10.3390/admsci8040065

Abstract

In spite of the importance of the brand management in marketing studies and practice, there is a scarcity of prior research on the links between brand equity and financial performance, particularly in unlisted (unquoted) firms. The study contributes to prior research along a number of dimensions. It provides evidence on the relevance of brands for unlisted firms of several industries, by showing that brand equity is associated with financial performance even in non-quoted firms without world-recognized brands. Second, the study analyzes the association between brands and accounting-based measures of performance, across different windows and financial indicators. Finally, the evidence on earnings persistence is particularly relevant, as it potentially sheds light on the existing debate on the association between brand equity and stock markets. To the extent that firms with greater brand equity have more persistent earnings, current earnings contain greater information about future earnings, which show the relevance of brand management in the strategic planning of unlisted firms.

Highlights

We study the association between brand equity and firm performance, and whether firms that invest more in brand equity benefit from smoother earnings streams, by looking at earnings persistence
We study the association between brand equity and financial performance in unlisted firms
Our results indicate that unlisted firms that invest more in brand equity have stronger financial performance, more earnings persistence and greater future profitability

Summary

Introduction

Aaker (1991) identified the conceptual dimensions of brand equity as brand awareness, brand associations, perceived quality, brand loyalty, and other proprietary brand assets such as patents, trademarks and channel relationships. Keller (1993) defined the consumer-based brand equity as ‘the differential effect of brand knowledge on consumer response to the marketing of the brand’ and brand knowledge is a key antecedent of customer based brand equity. It is in turn conceptualized as a brand node in memory to which a variety of associations have been linked. Brand knowledge is decomposed into two separate constructs: brand awareness and brand image (associations)

Methods

Results

Conclusion