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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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    References listed on IDEAS

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    1. Healy, Paul M. & Kang, Sok-Hyon & Palepu, Krishna G., 1987. "The effect of accounting procedure changes on CEOs' cash salary and bonus compensation," Journal of Accounting and Economics, Elsevier, vol. 9(1), pages 7-34, April.
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    4. Carol J. Simon & Mary W. Sullivan, 1993. "The Measurement and Determinants of Brand Equity: A Financial Approach," Marketing Science, INFORMS, vol. 12(1), pages 28-52.
    5. Barth, ME & Clinch, G, 1998. "Revalued financial, tangible, and intangible assets: Associations with share prices and non-market-based value estimates," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 36, pages 199-233.
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    Cited by:

    1. William H. Beaver & Maria Correia & Maureen F. McNichols, 2012. "Do differences in financial reporting attributes impair the predictive ability of financial ratios for bankruptcy?," Review of Accounting Studies, Springer, vol. 17(4), pages 969-1010, December.
    2. Ying Cao & James N. Myers & Linda A. Myers & Thomas C. Omer, 2015. "Company reputation and the cost of equity capital," Review of Accounting Studies, Springer, vol. 20(1), pages 42-81, March.
    3. Chris Armstrong & Antonio Davila & George Foster, 2006. "Venture-backed Private Equity Valuation and Financial Statement Information," Review of Accounting Studies, Springer, vol. 11(1), pages 119-154, March.

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