The Performance of Global Brands in the 2008 Financial Crisis: A Test of Two Brand Value Measures

Posted: 14 Jan 2012 Last revised: 26 Jul 2012

See all articles by Johny K. Johansson

Johny K. Johansson

Georgetown University; Georgetown University - Department of Marketing

Claudiu Dimofte

San Diego State University

Sanal Mazvancheryl

American University - Kogod School of Business

Date Written: December 15, 2011

Abstract

Previous literature has argued that high brand equity helps stabilize financial returns and reduce share price volatility. This research investigates how some of the strongest brands in the U.S. market fared in terms of financial performance during the Fall 2008 stock market downturn. Initial results using a financially based measure of brand value (Interbrand) show that, counter to expectations, these top brands did not outperform the market as a whole. However, the findings are in the hypothesized direction when an alternative, consumer-based brand equity measure (EquiTrend) is used to replicate the analysis. After first employing the three Fama-French factors to evaluate stock performance, we assess the added brand equity effect using both aforementioned measures. The customer-based measure shows a significant incremental effect on stock performance, helping explain more variance than the classic Fama-French model alone accounts for. Furthermore, this positive effect on returns holds even when controlling for financial fundamentals and also applies to stock volatility and firm betas. None of these effects hold for the financially-based measure.

Keywords: brand equity, Interbrand, EquiTrend, stock market

Suggested Citation

Johansson, Johny K. and Dimofte, Claudiu and Mazvancheryl, Sanal, The Performance of Global Brands in the 2008 Financial Crisis: A Test of Two Brand Value Measures (December 15, 2011). Georgetown McDonough School of Business Research Paper No. 2012-06, Available at SSRN: https://ssrn.com/abstract=1984941 or http://dx.doi.org/10.2139/ssrn.1984941

Johny K. Johansson

Georgetown University ( email )

Washington, DC 20057
United States
2026873763 (Phone)

Georgetown University - Department of Marketing

Washington, DC 20057
United States

Claudiu Dimofte (Contact Author)

San Diego State University ( email )

San Diego, CA 92182-0763
United States

Sanal Mazvancheryl

American University - Kogod School of Business ( email )

4400 Massachusetts Avenue NW
Washington, DC 20816-8044
United States

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