Brand value and firm performance nexus: Further empirical evidence
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MATTHEW YEUNG is a lecturer in Marketing Research at the Business School of the Open University of Hong Kong. He obtained his PhD from the University of Nottingham. His core research focuses on customer satisfaction and business ethics. He has published articles in leading academic journals such as the Journal of Business Research and the Journal of Strategic Marketing.
BALA RAMASAMY is Professor of Economics at the China Europe International Business School in Shanghai, China. He has PhD in Economics from the University of Leicester, UK. His research interests are in foreign direct investment and international trade, corporate social responsibility in Asia, and in Asian economies. His research has been published among others, in the Journal of Business Research, Journal of Corporate Citizenship, Journal of World Economy, Journal of Applied Economics, ASEAN Economic Bulletin and the Journal of Asia Pacific Economy.
Keywords
Abstract
brand value; brand equity; business performance; panel data techniques; return on brand investment; value-relevance
Establishing a link between brand value and firm performance is important because (1) like other forms of investment, expenditure on building brand value has to improve shareholder value; (2) it provides marketers with the necessary justification that brand investments have the required payoff; (3) it allows for brand equity to be included in the balance sheet. Previous research has provided evidence to support a positive relationship between the two variables, but they tend to be based on individual-level data. Studies that are based on secondary and/or third-party information are not rigorous in their methodology. In this paper, we use a panel data framework comprising the leading 50 US companies between 2000 and 2005 to establish the nexus between brand value and various measures of firm performance. We also utilise the price and returns model to show that brand value could provide some value-added information for future share price predictions.
Journal of Brand Management (2008) 15, 322–335. doi:10.1057/palgrave.bm.2550092; published online 20 July 2007
INTRODUCTION
Matthew Yeung School of Business and Administration, The Open University of Hong Kong, 30 Good Shepherd Street, Homantin, Kowloon, Hong Kong Tel: 852 2768 6951 Fax: 852 2391 9095 E-mail: [email protected]
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Academic and practitioner interest in brand-related research has increased dramatically over the past two decades. Since the seminal work of Aaker,1 there has been a burgeoning interest in the nature of brand attitudes, brand equity, brand loyalty and their measurement, antecedents and consequences (eg Aaker,2 Yoo et al.,3 Pahud De Mortanges and Van Riel,4 Aaker,5). It appears that business interest in branding has increased in tandem with academic concerns. In its recent edition of Advertising Ratios and
Budgets, Schonfeld & Associates report staggering growth rates in advertising budgets of well-known brands.6 For instance, Nestle will increase its 2007 budget by 9.1 per cent over the pre
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