Do Strong Brands Pay Off? An Empirical Investigation of the Relation between Brand Asset(Tm) Valuator and Financial Performance

In this study, we investigate the relation between Brand Asset(TM) Valuator and financial performance measures. More specifically, we investigate whether pillars of the Brand Asset(TM) Valuator model (Brand Vitality and Brand Stature) are associated with accounting performance (return on investment, return on sales and sales over total assets). Brands are generally considered a large part of the intangible assets of companies, yet the economic consequences of brand management are often difficult to establish. Three questions are addressed: (1) Compared to financial data, do the Brand Asset(TM) Valuator pillars provide relative or incremental value? (2) Are Brand Asset(TM) Valuator pillars leading indicators of accounting performance? And (3) Are there non-linear relations between Brand Asset(TM) Valuator pillars and financial performance? Our results indicate that Brand Vitality (one of the pillars of Brand Asset Valuatorcopy;) is positively and significantly associated with financial performance, while Brand Stature does not appear to have a direct relation with financial performance. Second, Brand Vitality and Brand Stature provide some incremental information in addition to previous year financial performance data; however, the relative information content of Brand Vitality and Brand Stature is lower than previous year financial performance. Third, we find some evidence that the relation between brand value and financial performance is non-linear; high Brand Equity companies display superior financial performance