The impact of brand quality on shareholder wealth

Bharadwaj, Sundar G., Tuli, Kapil R. and Bonfrer, Andre (2011) The impact of brand quality on shareholder wealth. Journal of Marketing, 75 5: 88-104. doi:10.1509/jmkg.75.5.88


Author Bharadwaj, Sundar G.
Tuli, Kapil R.
Bonfrer, Andre
Title The impact of brand quality on shareholder wealth
Journal name Journal of Marketing   Check publisher's open access policy
ISSN 0022-2429
Publication date 2011
Sub-type Article (original research)
DOI 10.1509/jmkg.75.5.88
Volume 75
Issue 5
Start page 88
End page 104
Total pages 17
Place of publication Chicago, IL United States
Publisher American Marketing Association
Language eng
Formatted abstract
This study examines the impact of brand quality on three components of shareholder wealth: stock returns, systematic risk, and idiosyncratic risk. The study finds that brand quality enhances shareholder wealth insofar as unanticipated changes in brand quality are positively associated with stock returns and negatively related to changes in idiosyncratic risk. However, unanticipated changes in brand quality can also erode shareholder wealth because they have a positive association with changes in systematic risk. The study introduces a contingency theory view to the marketing–finance interface by analyzing the moderating role of two factors that are widely followed by investors. The results show an unanticipated increase (decrease) in current-period earnings enhances (depletes) the positive impact of unanticipated changes in brand quality on stock returns and mitigates (enhances) their deleterious effects on changes in systematic risk. Similarly, brand quality is more valuable for firms facing increasing competition (i.e., unanticipated decreases in industry concentration). The results are robust to endogeneity concerns and across alternative models. The authors conclude by discussing the nuanced implications of their findings for shareholder wealth, reporting brand quality to investors, and its use in employee evaluation.
Keyword Brand quality
Earnings
Idiosyncratic risk
Industry concentration
Marketing finance interface
Stock Returns
Systematic risk
Q-Index Code C1
Q-Index Status Provisional Code
Institutional Status Non-UQ

Document type: Journal Article
Sub-type: Article (original research)
Collection: UQ Business School Publications
 
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Created: Thu, 24 Sep 2015, 10:00:44 EST by Karen Morgan on behalf of UQ Business School