Abstract

http://ssrn.com/abstract=1710367
 
 

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Brand Perception, Cash Flow Stability, and Financial Policy


Yelena Larkin


Penn State University

March 1, 2013

Journal of Financial Economics (JFE), Forthcoming

Abstract:     
This paper demonstrates that intangible assets play an important role in financial policy. Using a proprietary database of consumer brand evaluation, I show that positive consumer attitude toward a firm’s products alleviates financial frictions and provides additional net debt capacity, as measured by higher leverage and lower cash holdings. Brand perception affects financial policy through reducing overall firm riskiness, as strong consumer evaluations translate into lower future cash flow volatility as well as higher credit ratings for potentially volatile firms. The impact of brand is stronger among small firms, contradicting a number of reverse causality and omitted variables explanations.

Number of Pages in PDF File: 50

Keywords: product market, consumer demand, capital structure, cash, payout

JEL Classification: G30, G32, G35, G39

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Date posted: November 17, 2010 ; Last revised: September 5, 2013

Suggested Citation

Larkin, Yelena, Brand Perception, Cash Flow Stability, and Financial Policy (March 1, 2013). Journal of Financial Economics (JFE), Forthcoming. Available at SSRN: http://ssrn.com/abstract=1710367 or http://dx.doi.org/10.2139/ssrn.1710367

Contact Information

Yelena Larkin (Contact Author)
Penn State University ( email )
University Park, PA 16802
United States
8148655191 (Phone)
HOME PAGE: http://www.entrepreneurship.psu.edu/smeal/dirbio/displayBio.php?t_user_id=yxl47
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References:  71

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