The financial performance of the most valuable brands: A global empirical investigation

Abstract

We investigate the financial performance of the most valuable brands as provided by the publicly available Interbrand list on an annual basis. By applying standard multi-factor performance evaluation models, and the new five-factor model of Fama and French (2015), we observe that the most valuable brands outperform the market during the overall period from 2000 to June 2018 as well as during different market conditions. However, the extent of the outperformance is much larger during bear than during normal periods, suggesting that the most valuable brands tend to perform better during weak financial market periods. Moreover, we find that the outperformance is driven by only a few industries, e.g., business services, technology and retail. Analyzing the financial performance of the most valuable brands provided by Forbes and BrandZ reveals similar results to those of Interbrand.