Brand Names: Measurement and Valuation
57 Pages Posted: 8 Jul 2022 Last revised: 19 Dec 2023
Date Written: June 26, 2022
Abstract
We highlight limitations of using the input measure of brand value (i.e., cumulative advertising expenses) when studying brand name companies. Using Interbrands’ data as well as a novel text-based measure of brand value, we find that an equal-weighted portfolio of best brands earns a yearly abnormal return of 3%. Intangible factors proposed in the literature have no explanatory power for the premium. The excess returns are driven by companies that develop their brands internally and analysts underestimate future earnings of brand names in their forecasts. We find no abnormal returns associated with the input measure of brand value.
Keywords: Brand value, intangible assets, excess returns, undervaluation, Textual analysis
JEL Classification: G01, G11, G14
Suggested Citation: Suggested Citation