More on intangibles: Do stockholders benefit from brand values?

Abstract

This paper analyzes the relationship between brand value and short and long-run stock performance. An equally-weighted portfolio of the American non-financial companies recognized by Interbrand as part of the 100 most valuable global brands earned an eleven-day cumulative abnormal returns (CARs) of 0.54% (17.79% annually) and a three-day CARS of 0.31% (37.97% annually) from 2001 through 2012. The four-factor monthly alpha averaged 1.1428% (13.7136% annually) over the risk-free rate and 1.3317% (15.9804% annually) over the S&P 500 index. Regression results show that the companies' brand values and capitalization were significant contributors to CARS. In addition, the average buy-and-hold return for a portfolio with annual rebalancing to include the recognized companies the preceding year was 15.29%. The annually rebalanced portfolio outperformed the industry average by 3.45% and the S&P 500 by 8.99%. All the above mentioned returns were significant at the 1% level. However, the data shows that consumer reaction to brand ranking is positive but not significant.