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Brand Values and Capital Market Valuation

Author

Listed:
  • Mary E. Barth

    (Stanford University)

  • Michael B. Clement

    (University of Texas at Austin)

  • George Foster

    (Stanford University)

  • Ron Kasznik

    (Stanford University)

Abstract

Brand value estimates are significantly positively related to prices and returns, incremental to accounting variables. Questionable brand value estimate reliability underlies lack of financial statement recognition for brands. Findings suggest estimates are relevant and sufficiently reliable to be reflected in share prices. Simultaneous equations estimation reveals inferences are unaffected by potential bias resulting from simultaneity between brand value estimates and equity market value. Brand value estimates are positively associated with advertising expense, operating margin, and market share. Yet, brand value estimates provide significant explanatory power for prices incremental to these variables, and to recognized brand assets and analysts earnings forecasts.

Suggested Citation

  • Mary E. Barth & Michael B. Clement & George Foster & Ron Kasznik, 1998. "Brand Values and Capital Market Valuation," Review of Accounting Studies, Springer, vol. 3(1), pages 41-68, March.
    • Handle: RePEc:spr:reaccs:v:3:y:1998:i:1:d:10.1023_a:1009620132177
    DOI: 10.1023/A:1009620132177
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