Review of Accounting Studies

, Volume 3, Issue 1, pp 41-68

First online:

Brand Values and Capital Market Valuation

  • Mary E. BarthAffiliated withGraduate School of Business, Stanford University
  • , Michael B. ClementAffiliated withCollege of Business Administration, University of Texas at Austin
  • , George FosterAffiliated withGraduate School of Business, Stanford University
  • , Ron KasznikAffiliated withGraduate School of Business, Stanford University

Rent the article at a discount

Rent now

* Final gross prices may vary according to local VAT.

Get Access


Brand value estimates are significantly positively related to prices and returns, incremental to accounting variables. Questionable brand value estimate reliability underlies lack of financial statement recognition for brands. Findings suggest estimates are relevant and sufficiently reliable to be reflected in share prices. Simultaneous equations estimation reveals inferences are unaffected by potential bias resulting from simultaneity between brand value estimates and equity market value. Brand value estimates are positively associated with advertising expense, operating margin, and market share. Yet, brand value estimates provide significant explanatory power for prices incremental to these variables, and to recognized brand assets and analysts earnings forecasts.