Corporate Brand and Stock Returns

Maria do Carmo de Carvalho Rodrigues Rodrigues, Magali Pedro Costa, Lígia Catarina Marques Febra



With the globalization and the increased complexity and competitiveness in the markets, intangible assets have become one of the best and most valuable tools owned and used by firms (Kay, 2006; Perez & Famá, 2006). The brand, as an intangible asset, stands out for its ability to differentiate competing firms, contributing to the definition of the strategy and the good positioning of the entities (Gromark & Melin, 2011; Shocker, Srivastava, & Ruekert, 1994). Firms with high brand value standards experience higher chances of keeping a sustained superior performance over the course of time. In this way, it is important to analyse the impact of corporate brand on returns and on risk. In order to understand if the firm's brand influences the abnormal returns and the systematic risk, we estimated a model based on firms' financial market data through a panel data analysis which included 28,031 firm-year observations, which occurred between 2007 to 2017, from a full sample of 367 firms, relative to 14 countries and 9 industries. Regarding the methodology, the model used in this study is characterized by the determination of risk-adjusted returns which estimation period coincides with the test period. So we believed that the use of market data and the methodology used is a contribution to the literature. The results indicate, contrary to what it was expected, that firms with higher ranking in BRANDFINANCE undergo lower abnormal returns when compared to those firms with low ranking.



Keyword: corporate brand, returns, financial performance, abnormal returns, systematic risk

JEL Classification: G12, M30


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