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Good times, bad times: the stock market performance of firms that own high value brands

Kevin Voss (Department of Marketing, Oklahoma State University, Stillwater, Oklahoma, USA)
Mayoor Mohan (Department of Marketing, Oklahoma State University, Stillwater, Oklahoma, USA)

European Journal of Marketing

ISSN: 0309-0566

Article publication date: 9 May 2016

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Abstract

Purpose

The purpose of the this paper is to correct a deficiency in the published literature by examining the share price performance of firms that own high-value brands in uptrending, downtrending and sideways markets.

Design/methodology/approach

The authors examined stock price performance for an index of firms that owned brands in the Interbrand list of the “Best Global Brands” from 2001 through 2009 using the Fama-French method.

Findings

The authors’ index outperformed the Standard & Poor’s 500 when the market was up or downtrending, but not when it moved sideways.

Research limitations/implications

The authors find that an index of firms that own the produced better returns than the Standard & Poor’s 500 market index. Owning highly valued brands may be a marketplace signal to the investing community regarding the firm’s management acumen.

Practical implications

Owning high-value brands seems to influence share price performance, a metric used to judge chief executive officers. Thus, brand investments align with the shareholders’ interest. The authors help alleviate the perception (Challagalla et al., 2014) that marketing managers make investments on an ad hoc basis.

Originality/value

For the first time, the authors evaluate the effect of owning one or more of the world’s most valuable brands on the market value of common stock using data from downtrending, uptrending and no-trend periods. This research is also among the first to introduce volatility into the Fama-French method and it is an important explanatory variable. This paper’s approach has interesting comparisons to other papers taking a similar analytical approach.

Keywords

Acknowledgements

Tu Le, Minh “Mandy” Dinh and Doug Nguyen, graduate students at Oklahoma State University, were instrumental in the collection and preparation of the data. The authors express their appreciation to Alex Zablah, Josh Wiener and Bashar Gammoh and three anonymous reviewers for their helpful comments on earlier versions of this manuscript.

Citation

Voss, K. and Mohan, M. (2016), "Good times, bad times: the stock market performance of firms that own high value brands", European Journal of Marketing, Vol. 50 No. 5/6, pp. 670-694. https://doi.org/10.1108/EJM-12-2013-0716

Publisher

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Emerald Group Publishing Limited

Copyright © 2016, Emerald Group Publishing Limited

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