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Valuation of brands and intellectual capital

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  • Fernández, Pablo

    () (IESE Business School)

Abstract

In this paper we review several methods used for valuing brands. Among them, those of Interbrand, Damodaran, Financial World, Houlihan Valuation Advisors, Market Facts, Young & Rubicam and CDB Research & Consulting. In particular, we analyze in depth the valuations of Kellogg's and Coca-Cola performed by Damodaran and the method proposed by Interbrand. Damodaran valued the Coca-Cola brand at 24.6 billion dollars in 1993 and at 102.6 billion dollars in 1998. In recent years, a lot has been said about the value of companies' intellectual capital. However, almost all of the studies on the subject are highly descriptive and a long way from obtaining a quantitative valuation. It is by no means clear what the company's intellectual capital is, and even less so if we intend to value the company's brand and intellectual capital separately. Our goal is to show the limitations of a number of the methods proposed for valuing brands and intellectual capital and, within the limits imposed by the brand's intrinsic reality, establish guidelines for value creation through the study of brands and intellectual capital. We also propose a scheme for identifying brand value drivers, that is, the parameters influencing the brand's value.

Suggested Citation

  • Fernández, Pablo, 2002. "Valuation of brands and intellectual capital," IESE Research Papers D/456, IESE Business School.
  • Handle: RePEc:ebg:iesewp:d-0456
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    File URL: http://www.iese.edu/research/pdfs/DI-0456-E.pdf
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    References listed on IDEAS

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    1. Martha Amram & Nalin Kulatilaka, 2000. "Strategy And Shareholder Value Creation: The Real Options Frontier," Journal of Applied Corporate Finance, Morgan Stanley, vol. 13(2), pages 15-28.
    2. Grenadier, Steven R. & Weiss, Allen M., 1997. "Investment in technological innovations: An option pricing approach," Journal of Financial Economics, Elsevier, vol. 44(3), pages 397-416, June.
    3. Aswath Damodaran, 2000. "The Promise Of Real Options," Journal of Applied Corporate Finance, Morgan Stanley, vol. 13(2), pages 29-44.
    4. Margrabe, William, 1978. "The Value of an Option to Exchange One Asset for Another," Journal of Finance, American Finance Association, vol. 33(1), pages 177-186, March.
    Full references (including those not matched with items on IDEAS)

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Valoracion de marcas. El modelo de Interbrand.
      by Ramon Ananos in Ramon Ananos on 2006-08-01 21:42:00

    More about this item

    Keywords

    Brand value; brand value drivers; intellectual capital; brand valuation process;

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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