Brand Values and Capital Market Valuation

Mary E. Barth, Michael B. Clement, George Foster and Ron Kasznik
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Mary E. Barth: Stanford University
Michael B. Clement: University of Texas at Austin
George Foster: Stanford University
Ron Kasznik: Stanford University

Review of Accounting Studies, 1998, vol. 3, issue 1, No 4, 68 pages

Abstract: 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.

Keywords: Market Share; Explanatory Power; Estimate Reliability; Potential Bias; Simultaneous Equation (search for similar items in EconPapers)
Date: 1998
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DOI: 10.1023/A:1009620132177

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