The impact of mergers and acquisitions on brand equity: A structural analysis

Yanlai Chu, Junhong Chu and Hongju Liu

International Journal of Research in Marketing, 2021, vol. 38, issue 3, 615-638

Abstract: An overlooked strategic benefit of mergers and acquisitions (M&As) is their impact on brand equity. M&As may affect consumer brand preferences, which in turn will affect a firm’s profit. We develop a structural model with a difference-in-differences specification to measure how M&As affect a firm’s profit through three mechanisms: brand equity, cost synergies, and product portfolios. We analyze Lenovo’s acquisition of IBM’s PC division in China’s PC market and find that the increase in brand equity contributed the most to increasing Lenovo’s profit, followed by cost synergies. To explore the generalizability of our modeling approach, we apply it to Geely’s acquisition of Volvo and also find that the gains in brand equity contributed the most to Geely’s profit increase.

Keywords: Mergers and acquisitions; Brand equity; Structural modeling (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ijrema:v:38:y:2021:i:3:p:615-638

DOI: 10.1016/j.ijresmar.2020.11.006

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