Do Strong Brands Pay Off? An Empirical Investigation of the Relation between Brand Asset(Tm) Valuator and Financial Performance

NRG Working Paper No. 06-03

44 Pages Posted: 25 Apr 2006

See all articles by Pieter Vijn

Pieter Vijn

Nyenrode University

Frank Verbeeten

Utrecht University - School of Economics

Date Written: January 2006

Abstract

In this study, we investigate the relation between Brand Asset(TM) Valuator and financial performance measures. More specifically, we investigate whether pillars of the Brand Asset(TM) Valuator model (Brand Vitality and Brand Stature) are associated with accounting performance (return on investment, return on sales and sales over total assets). Brands are generally considered a large part of the intangible assets of companies, yet the economic consequences of brand management are often difficult to establish. Three questions are addressed: (1) Compared to financial data, do the Brand Asset(TM) Valuator pillars provide relative or incremental value? (2) Are Brand Asset(TM) Valuator pillars leading indicators of accounting performance? And (3) Are there non-linear relations between Brand Asset(TM) Valuator pillars and financial performance? Our results indicate that Brand Vitality (one of the pillars of Brand Asset Valuator©) is positively and significantly associated with financial performance, while Brand Stature does not appear to have a direct relation with financial performance. Second, Brand Vitality and Brand Stature provide some incremental information in addition to previous year financial performance data; however, the relative information content of Brand Vitality and Brand Stature is lower than previous year financial performance. Third, we find some evidence that the relation between brand value and financial performance is non-linear; high Brand Equity companies display superior financial performance.

Keywords: Brand Management, Financial Management, Brand Asset, Financial Management, Marketing

JEL Classification: M00

Suggested Citation

Vijn, Pieter and Verbeeten, Frank H.M., Do Strong Brands Pay Off? An Empirical Investigation of the Relation between Brand Asset(Tm) Valuator and Financial Performance (January 2006). NRG Working Paper No. 06-03, Available at SSRN: https://ssrn.com/abstract=896703 or http://dx.doi.org/10.2139/ssrn.896703

Pieter Vijn (Contact Author)

Nyenrode University ( email )

Straatweg 25
3621 BG BREUKELEN
Netherlands

Frank H.M. Verbeeten

Utrecht University - School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, 3584 EC
Netherlands
+31 30 253 9800 (Phone)

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