The influence of brands and images on the financial performance - An empirical investigation of the EuroStoxx 50

Table of Contents

Introduction

Part I. Intangible assets

1 Definition, facts and problems of intangibles

1.1 Definition of intangible assets

1.2 Facts, problems and chances of intangibles

2 Definition and accounting of brand values

2.1 Definition of brand value

2.2 Accounting abilities of brand values

2.2.1 Accounting according to IFRS

2.2.2 Accounting according to US-GAAP

2.2.3 Conclusion and outlook

3 Brand valuation methodologies

3.1 Interbrand

3.2 BBDO

3.3 Chances and limitations of the approach by BBDO

4 Existing empirical evidence

4.1 Investigation on the basis of non-financial factors

4.2 Market-to-book (MB) ratio as indicator

4.3 Analysis by the Interbrand list

4.4 Study based on different influence factors

Part II. Investigation of the relationship between brand value and financial performance

1 Empirical analysis

1.1 Goal of the present empirical investigation

1.2 Methodology and Data

1.3 Development of the brand value

1.4 Performance measurement without systematic risk

1.5 The Model

2 Results

2.1 Portfolio 1

2.2 Portfolio 2

2.3 Portfolio 3

2.4 Portfolio 4

2.5 Portfolio 5

3 Summary and interpretation of the results

4 Information criteria

5 Statistical tests

5.1 T-test

5.2 Tests for heteroskedasticity

5.2.1 White test

5.2.2 Autoregressive conditional heteroskedasticity (ARCH)

5.3 Tests for autocorrelation

Conclusion

Research Objectives and Core Themes

This thesis investigates the correlation between the brand value of companies listed in the EuroStoxx 50 index and their respective financial performance. The primary research question centers on whether a company’s high brand value acts as a reliable predictor for superior financial returns for shareholders.

• Analysis of intangible assets and the definition of brand value.
• Evaluation of common brand valuation methodologies (Interbrand and BBDO).
• Empirical assessment of the relationship between brand rankings and stock performance.
• Use of Jensen Alpha for performance measurement and portfolio benchmarking.
• Application of statistical tests to validate empirical findings and ensure unbiased results.

Excerpt from the Book

Summary of Chapters

Introduction: Provides the motivation for the study, focusing on the rising importance of brand value and the core research question regarding its connection to financial performance.

Part I. Intangible assets: Explains the conceptual framework of intangible assets, definitions of brand value, various valuation methods, and existing empirical evidence from prior studies.

Part II. Investigation of the relationship between brand value and financial performance: Describes the methodology for constructing portfolios based on brand value, calculates performance using the Jensen Alpha model, interprets the results, and performs necessary statistical validation tests.

Conclusion: Summarizes the key findings, noting that middle-ranked brands often outperform the top-tier brands, and discusses the implications for accounting standards and future investment strategies.

Keywords

Brand value, Financial performance, EuroStoxx 50, Intangible assets, Jensen Alpha, BBDO, Interbrand, Stock returns, Portfolio analysis, Market capitalization, Shareholder value, Econometrics, Accounting standards, IFRS, US-GAAP.

Frequently Asked Questions

What is the core focus of this thesis?

The thesis examines whether there is a measurable connection between a company's brand value and its financial performance, specifically using companies within the EuroStoxx 50 index.

What are the key thematic areas addressed?

The work covers intangible assets, various brand valuation methodologies (specifically Interbrand and BBDO), empirical evidence from previous literature, and a quantitative study of portfolio performance.

What is the primary objective or research question?

The main objective is to determine if higher brand value leads to better stock price performance, ultimately advising investors whether to favor companies with high brand values.

Which scientific methods are employed?

The study utilizes a portfolio-based approach, constructing five portfolios sorted by BBDO brand value, and measures their performance relative to a benchmark using the Jensen Alpha model.

What is covered in the main body of the work?

The main body is divided into two parts: the theoretical foundations of intangible assets and brand valuation, followed by the empirical investigation, including the model construction, portfolio result analysis, and rigorous statistical testing.

Which keywords best characterize this work?

Key terms include Brand value, Financial performance, EuroStoxx 50, Jensen Alpha, Portfolio analysis, and Intangible assets.

How does the author evaluate the "best" brands?

The author uses BBDO's Brand Equity Evaluation System (BEES), which aggregates various factors like sales potential, profitability, and expert judgment to create a monetary brand value.

What is a surprising conclusion of the research?

Surprisingly, the study finds that portfolios consisting of middle-ranked companies regarding brand value often outperform the portfolios containing the "best" (top-ranked) brands, contradicting some previous expectations.