The Influence Of Brands And Images On The Financial Performance An Empirical Investigation Of The Eurostoxx 50
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The influence of brands and images on the financial performance - An empirical investigation of the EuroStoxx 50
Diploma Thesis from the year 2007 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 2,3, University of Regensburg, language: English, abstract: There are many consultancies, for example, Interbrand, Brand Finance or Batten, Barton, Durstine & Osborn (BBDO) that create annual lists of companies ranked by their brand value. Over the years, these popular rankings have become more and more relevant to companies because they are of the opinion that they can thereby increase their degree of popularity. Therefore, an interesting question arises: Is there any connection between the company’s brand value and its financial performance? The list of the one hundred most valued brands published by Interbrand, probably the most famous global branding consultancy of the world, has made its contribution to the increased popularity of brand value, not only in the United States but meanwhile also in Europe. If you peruse the best global brands 2006 list attentively, you will observe that nearly half of the companies, exactly 49%, are non-US companies, compared to only 37% in the year 2001. 37 of the 100 companies are from Europe, with Nokia as the most valuable European brand ranked as number six. Moreover, nine companies are based in Germany, sorted by brand value: Mercedes, BMW, SAP, Siemens, Volkswagen, adidas, Audi, Porsche, and Nivea. Further evidence for the raised acceptance and attractiveness of intangible assets, brand value included, provides the fact that since the early 1980s the share of intangible assets of concerns has increased from an average of 40% in their brand value to over 80% by the end of the 1990s. As a result, only about 20% of a company’s brand value will be recorded by the accounting system. Thus, it is difficult for the companies to explain this overvalue to the shareholders. The first part of this paper deals with intangible assets in general. The first part concludes with the description of the results of other empirical studies about the connection between brand value and stock performance. The second part of the working paper examines the relationship between brand value and stock performance of the EuroStoxx 50 companies. First, the empirical analysis is described, followed by the presentation of the results of the investigation. These results are then summarised and interpreted. The information criteria will be explained hereafter. Finally yet importantly, the statistical tests based on the results of the study are summed up.
An Empirical Investigation of Brand Equity
Purpose: The author presents a model of the brand value drivers, measured by brand equity. The goal of this research is to identify the drivers, and determine how they influence brand equity performance in the researched industry, in order to develop a more effective brand strategy. Design/Methodology: The author studied an aggregate dataset for 739 food brands. Six predictors have been controlled for (i.e. marketing investments, price, revenue, perceived quality [organic and functional] and brand ownership), while the impact of the brand equity drivers on brand value has been estimated. The model has been formulated and estimated using a robust OLS procedure. Several data sources have been used in this study, such as market-based data from ACNielsen, as well as information and variable constructs using data from the Bureau Van Dijk Electronic Publishing AIDA financial statements database. Findings: Results suggest that marketing investment, price, revenue, brand ownership and perceived quality are highly associated with brand equity, and consequently with a higher brand value in the food industry. Research limitations/Implications: This study has only studied one industry (food), one industry segment (enriched-food) and one country (Italy). Originality/Value: The majority of marketing studies apply a single research approach and measures. This is the first study of brand equity that combines consumer, financial and marketing approaches. The model contributes to theory and practice in terms of suggesting which business drivers create brand value and what type of brand strategy a firm can apply in order to create brand value.
Do Strong Brands Pay Off? An Empirical Investigation of the Relation between Brand Asset(Tm) Valuator and Financial Performance
In this study, we investigate the relation between Brand Asset(TM) Valuator and financial performance measures. More specifically, we investigate whether pillars of the Brand Asset(TM) Valuator model (Brand Vitality and Brand Stature) are associated with accounting performance (return on investment, return on sales and sales over total assets). Brands are generally considered a large part of the intangible assets of companies, yet the economic consequences of brand management are often difficult to establish. Three questions are addressed: (1) Compared to financial data, do the Brand Asset(TM) Valuator pillars provide relative or incremental value? (2) Are Brand Asset(TM) Valuator pillars leading indicators of accounting performance? And (3) Are there non-linear relations between Brand Asset(TM) Valuator pillars and financial performance? Our results indicate that Brand Vitality (one of the pillars of Brand Asset Valuatorcopy;) is positively and significantly associated with financial performance, while Brand Stature does not appear to have a direct relation with financial performance. Second, Brand Vitality and Brand Stature provide some incremental information in addition to previous year financial performance data; however, the relative information content of Brand Vitality and Brand Stature is lower than previous year financial performance. Third, we find some evidence that the relation between brand value and financial performance is non-linear; high Brand Equity companies display superior financial performance.