Risk Analysis in Brand Valuation

21 Pages Posted: 19 Sep 2006

See all articles by Francesca Beccacece

Francesca Beccacece

Bocconi University - Department of Decision Sciences

Emanuele Borgonovo

Bocconi University - Department of Decision Sciences

Francesco Reggiani

University of Zurich

Date Written: July 2006

Abstract

After an empirical start, brand valuation has attracted the interest of both accounting practitioners and academicians. Several methods for the assessment of brand value have been developed. However, a major critique shared by these models has been the lack of objectivity. In view of such criticism, the Japanese Ministry of Economy, Trade and Labour created a dedicated Committee with the twofold task of rigorously defining brand and of developing a methodology for brand valuation based on publicly available balance sheet data. The result goes under the name of the Hirose methodology. The methodology, however, while achieving the above two mentioned key-merits, does not allow a financial interpretation of the valuation results. We propose a brand valuation model which merges objectivity with robust underlying quantitative structure thus sharing a direct financial interpretation and providing risk analysis insights. An empirical analysis allows us to compare both numerical results and financial insights derived by analysts from the utilization of the Hirose Methodology, the Royalty Method and the proposed model.

Keywords: Brand Valuation, Hirose Methodology, Risk Analysis, Brand Default Probability

JEL Classification: M41, M44, M47, G12

Suggested Citation

Beccacece, Francesca and Borgonovo, Emanuele and Reggiani, Francesco, Risk Analysis in Brand Valuation (July 2006). Available at SSRN: https://ssrn.com/abstract=931023 or http://dx.doi.org/10.2139/ssrn.931023

Francesca Beccacece

Bocconi University - Department of Decision Sciences ( email )

Via Roentgen 1
Milan, 20136
Italy

Emanuele Borgonovo (Contact Author)

Bocconi University - Department of Decision Sciences ( email )

Via Roentgen 1
Milan, 20136
Italy

Francesco Reggiani

University of Zurich ( email )

Rämistrasse 71
Zürich, CH-8006
Switzerland

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