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<p>This study investigates the relationship between brand value and firm value by introducing a new metric, Brand Value Relevance (BVR), calculated as brand value divided by market value, representing the importance of brands to the business. The objective was to determine whether companies with high BVR outperform those with low BVR. We analyzed data from the Brand Finance US 500 brand ranking and NYSE and NASDAQ stocks (2013–2023), using the Fama &amp; French 5-factor model. Contrary to expectations, we found no significant difference in performance between the high and low BVR portfolios and both slightly underperformed the market. However, consistent with prior research, the overall portfolio of companies with strong brands outperformed the market and showed lower volatility. Incorporating an analysis by TRBC segment classification revealed how BVR varies across sectors and highlighted a potential link between low book-to-market stocks and higher BVR, potentially leading to higher alphas and returns. Unexpectedly, segments with low BVR factors demonstrated lower volatility but also lower returns than segments with high BVR factors. The BVR factor expands the scope of potential studies, enhancing our comprehension of the relationship between brand value and firm value.</p>

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Do brands matter? A new approach to the relationship between brand value and firm value

  • 期刊论文

  • 发表日期：

    2025年8月21日

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  • Ricardo Rodriguez Whately,
  • Jorge Brantes Ferreira,
  • Marcelo Cabús Klotzle

摘要

This study investigates the relationship between brand value and firm value by introducing a new metric, Brand Value Relevance (BVR), calculated as brand value divided by market value, representing the importance of brands to the business. The objective was to determine whether companies with high BVR outperform those with low BVR. We analyzed data from the Brand Finance US 500 brand ranking and NYSE and NASDAQ stocks (2013–2023), using the Fama & French 5-factor model. Contrary to expectations, we found no significant difference in performance between the high and low BVR portfolios and both slightly underperformed the market. However, consistent with prior research, the overall portfolio of companies with strong brands outperformed the market and showed lower volatility. Incorporating an analysis by TRBC segment classification revealed how BVR varies across sectors and highlighted a potential link between low book-to-market stocks and higher BVR, potentially leading to higher alphas and returns. Unexpectedly, segments with low BVR factors demonstrated lower volatility but also lower returns than segments with high BVR factors. The BVR factor expands the scope of potential studies, enhancing our comprehension of the relationship between brand value and firm value.