Brand Values and Capital Market Valuation

Posted: 13 Sep 1999

See all articles by Mary E. Barth

Mary E. Barth

Stanford University - Graduate School of Business

Michael B. Clement

University of Texas at Austin - Department of Accounting

George Foster

Stanford Graduate School of Business

Ron Kasznik

Stanford Graduate School of Business

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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.

JEL Classification: M41, M44, G12, G29

Suggested Citation

Barth, Mary E. and Clement, Michael B. and Foster, George and Kasznik, Ron, Brand Values and Capital Market Valuation. Review of Accounting Studies, Vol 3, Nos 1-2, 1998. Available at SSRN: https://ssrn.com/abstract=165849

Mary E. Barth (Contact Author)

Stanford University - Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
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650-723-9040 (Phone)
650-725-0468 (Fax)

Michael B. Clement

University of Texas at Austin - Department of Accounting ( email )

2110 Speedway, Stop B6400
Austin, TX 78712
United States
512-471-0332 (Phone)
512-471-3904 (Fax)

George Foster

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States
650-723-2812 (Phone)
650-725-7979 (Fax)

Ron Kasznik

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States
650-725-9740 (Phone)
650-725-6152 (Fax)

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