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Glamour brands and glamour stocks

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  • Billett, Matthew T.
  • Jiang, Zhan
  • Rego, Lopo L.

Abstract

We explore the influence of customer perceptions from the product market on firms’ return characteristics in the stock market. Using customers’ opinions on over 1200 brands, we find that stocks of companies with prestigious brands have high market-to-book ratios and large negative loadings on the Fama-French HML factor. This relation is not explained by distress risk, asset irreversibility/growth, or information asymmetry. The HML loadings are most pronounced when retail investor ownership is high (when institutional ownership is low), when the brand is less familiar, and when market-wide investor sentiment is high. We conclude glamour in the product market is an important component of glamour in the stock market.

Suggested Citation

  • Billett, Matthew T. & Jiang, Zhan & Rego, Lopo L., 2014. "Glamour brands and glamour stocks," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PB), pages 744-759.
    • Handle: RePEc:eee:jeborg:v:107:y:2014:i:pb:p:744-759
    DOI: 10.1016/j.jebo.2014.03.014
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    2. Musaab Mousa & Judit Sági & Zoltán Zéman, 2021. "Brand and Firm Value: Evidence from Arab Emerging Markets," Economies, MDPI, vol. 9(1), pages 1-13, January.
    3. Abid, Ilyes & Benlemlih, Mohammed & El Ouadghiri, Imane & Peillex, Jonathan & Urom, Christian, 2023. "Fossil fuel divestment and energy prices: Implications for economic agents," Journal of Economic Behavior & Organization, Elsevier, vol. 214(C), pages 1-16.
    4. Zeeshan Ahmed & Shahid Rasool & Qasim Saleem & Mubashir Ali Khan & Shamsa Kanwal, 2022. "Mediating Role of Risk Perception Between Behavioral Biases and Investor’s Investment Decisions," SAGE Open, , vol. 12(2), pages 21582440221, May.
    5. Durham, Greg & Santhanakrishnan, Mukunthan, 2016. "Ticker fluency, sentiment, and asset valuation," The Quarterly Review of Economics and Finance, Elsevier, vol. 61(C), pages 89-96.
    6. Prashant Das & Patrick Smith & Paul Gallimore, 2018. "Pricing Extreme Attributes in Commercial Real Estate: the Case of Hotel Transactions," The Journal of Real Estate Finance and Economics, Springer, vol. 57(2), pages 264-296, August.
    7. Jiang Luo & Avanidhar Subrahmanyam, 2019. "The affect heuristic and stock ownership : A theoretical perspective," Review of Financial Economics, John Wiley & Sons, vol. 37(1), pages 6-37, January.
    8. Jennifer Brown & Dylan Minor, 2015. "Misconduct in Financial Services: Differences across Organizations," Harvard Business School Working Papers 16-022, Harvard Business School.
    9. Navío-Marco, Julio & Serrano Calle, Silvia & Solórzano-García, Marta, 2017. "Analysis of glamorous acquisitions in the telecommunications sector: Overvaluation or success?," 28th European Regional ITS Conference, Passau 2017 169487, International Telecommunications Society (ITS).
    10. Pezzuti, Todd & Leonhardt, James M. & Warren, Caleb, 2021. "Certainty in Language Increases Consumer Engagement on Social Media," Journal of Interactive Marketing, Elsevier, vol. 53(C), pages 32-46.
    11. Vanitha Swaminathan & Sayan Gupta & Kevin Lane Keller & Donald Lehmann, 2022. "Brand actions and financial consequences: a review of key findings and directions for future research," Journal of the Academy of Marketing Science, Springer, vol. 50(4), pages 639-664, July.

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    More about this item

    Keywords

    Glamour stocks; Brand equity; HML loadings;
    All these keywords.

    JEL classification:

    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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