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Brand capital and corporate stock risk: A theoretical and empirical analysis

Author

Listed:
  • Ling, Aifan
  • Guan, Huihua
  • Zhang, Nannan

Abstract

This paper develops an investment-based capital asset pricing model that incorporates brand capital, and conducts both theoretical and empirical investigations into how corporate brand capital influences a firm’s stock risks. The key findings are as follows: First, brand capital can reduce corporate stock risks including market beta risk, idiosyncratic volatility, and total volatility risk. Second, the heterogeneity analysis reveals that the impact of brand capital on stock risks is more pronounced for companies in highly competitive industries, non-high-tech sectors, and those with low financing constraints. Similar effects are also observed during periods of low market risk. Third, the mechanism analysis shows that brand capital investment can lead to an increase in the external oversight and total factor productivity, as well as a decrease in tax avoidance. It is through these channels that brand capital reduces corporate stock risks. Finally, it is found that brand capital investment can also enhance corporate value and performance. This study provides both theoretical and empirical support for companies focusing on brand development, and offers policy recommendations for regulators to strengthen oversight of corporate information disclosure.

Suggested Citation

  • Ling, Aifan & Guan, Huihua & Zhang, Nannan, 2026. "Brand capital and corporate stock risk: A theoretical and empirical analysis," Research in International Business and Finance, Elsevier, vol. 81(C).
    • Handle: RePEc:eee:riibaf:v:81:y:2026:i:c:s0275531925004477
    DOI: 10.1016/j.ribaf.2025.103191
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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