There are many consultancies, for example, Interbrand, Brand Finance or Batten, Barton, Durstine & Osborn (BBDO) that create annual lists of companies ranked by their brand value. Over the years, these popular rankings have become more and more relevant to companies because they are of the opinion that they can thereby increase their degree of popularity. Therefore, an interesting question arises: Is there any connection between the company’s brand value and its financial performance? The list of the one hundred most valued brands published by Interbrand, probably the most famous global branding consultancy of the world, has made its contribution to the increased popularity of brand value, not only in the United States but meanwhile also in Europe. If you peruse the best global brands 2006 list attentively, you will observe that nearly half of the
companies, exactly 49%, are non-US companies, compared to only 37% in
the year 2001. 37 of the 100 companies are from Europe, with Nokia as the most valuable European brand ranked as number six. Moreover, nine companies are based in Germany, sorted by brand value: Mercedes, BMW, SAP, Siemens, Volkswagen, adidas, Audi, Porsche, and Nivea. Further evidence for the raised acceptance and attractiveness of intangible assets, brand value included, provides the fact that since the early 1980s the share of intangible assets of concerns has increased from an average of 40% in their brand value to over 80% by the end of the 1990s. As a result, only about 20% of a company’s brand value will be recorded by the accounting system. Thus, it is difficult for the companies to explain this overvalue to the
shareholders. The first part of this paper deals with intangible assets in general.
The first part concludes with the description of the results of other empirical studies about the connection between brand value and stock performance. The second part of the working paper examines the relationship between brand value and stock performance of the EuroStoxx 50 companies. First, the empirical analysis is described, followed by the presentation of the results of the investigation. These results are then summarised and interpreted. The information criteria will be explained hereafter. Finally yet importantly, the
statistical tests based on the results of the study are summed up.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- Part I. Intangible assets.
- Definition, facts and problems of intangibles
- Definition of intangible assets
- Facts, problems and chances of intangibles
- Definition and accounting of brand values
- Definition of brand value
- Accounting abilities of brand values
- Accounting according to IFRS
- Accounting according to US-GAAP
- Conclusion and outlook
- Brand valuation methodologies
- Interbrand
- BBDO
- Chances and limitations of the approach by BBDO
- Existing empirical evidence
- Investigation on the basis of non-financial factors
- Market-to-book (MB) ratio as indicator
- Analysis by the Interbrand list
- Study based on different influence factors
- Part II. Investigation of the relationship between brand value and financial performance
- Empirical analysis
- Goal of the present empirical investigation
- Methodology and Data
- Development of the brand value
- Performance measurement without systematic risk
- The Model
- Results
- Portfolio 1
- Portfolio 2
- Portfolio 3
- Portfolio 4
- Portfolio 5
- Summary and interpretation of the results
- Information criteria
- Statistical tests
- T-test
- Tests for heteroskedasticity
- White test
- Autoregressive conditional heteroskedasticity (ARCH)
- Tests for autocorrelation
- The importance of intangible assets in modern business
- The role of brand value in driving financial performance
- The relationship between brand image and corporate profitability
- The application of different brand valuation methodologies
- Empirical analysis of the impact of brands on financial performance
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This thesis examines the influence of brands and images on the financial performance of companies listed on the EuroStoxx50 index. The work focuses on identifying the relationship between brand value and financial performance, taking into account the impact of intangible assets. It aims to provide a comprehensive understanding of the role of brands in shaping corporate profitability and success.
Zusammenfassung der Kapitel (Chapter Summaries)
The thesis begins with an introduction to the concept of intangible assets, particularly focusing on brand value. Chapter 1 defines intangible assets and explores their challenges and opportunities. Chapter 2 discusses the definition and accounting of brand values, including the accounting principles of IFRS and US-GAAP.
Chapter 3 delves into the different methodologies used for brand valuation, examining the approaches of Interbrand and BBDO. Chapter 4 reviews existing empirical evidence on the relationship between brand value and financial performance. This chapter discusses studies based on non-financial factors, market-to-book ratios, the Interbrand list, and various influence factors.
The second part of the thesis focuses on the empirical investigation. Chapter 1 outlines the goal of the investigation, methodology, data, and the development of brand value. It then explores performance measurement without systematic risk and introduces the model used for analysis.
Chapter 2 presents the results of the empirical investigation, analyzing five different portfolios of EuroStoxx50 companies. The analysis includes discussions on summary statistics, statistical tests, and information criteria. Chapters 3 and 4 focus on summarizing and interpreting the results, highlighting key findings and their implications.
Schlüsselwörter (Keywords)
This study focuses on key terms such as intangible assets, brand value, financial performance, EuroStoxx50, brand valuation methodologies, empirical analysis, and statistical tests. It explores the relationship between brand image and corporate profitability, aiming to provide insights into the impact of intangible assets on financial performance.
- Quote paper
- Christian Weiß (Author), 2007, The influence of brands and images on the financial performance - An empirical investigation of the EuroStoxx 50, Munich, GRIN Verlag, https://www.grin.com/document/72146
