The Financial Value Impact of Perceptual Brand Attributes

The authors assess which brand asset metrics provide incremental information content to accounting performance measures in explaining stock return. The analysis focuses on the five "pillars," i.e., central brand attributes, that form the basis for the newly updated Young and Rubicam Brand Asset Valuator (Y&R BAV) model: Differentiation, Relevance, Esteem, Knowledge, and Energy. Analysis shows that perceived brand Relevance and Energy provide incremental information to accounting measures in explaining stock returns. Esteem and Knowledge do not, i.e., their effects are reflected in current-term accounting measures and in brand Relevance and Energy. The financial markets do not view Differentiation as having incremental information content, when, in fact, they should. Changes in Differentiation are indicative of future-term accounting performance, which, in turn, affects stock return. These conclusions are invariant to the use of alternative accounting performance measures, risk adjustments, and to the inclusion of additional brand attributes into the analysis.