Purpose – This study aims to validate a direct method to measure relational capital through the estimation of corporate brands. Considering the influence of relational capital management in leading performance and brand development, we consider brand value as a proxy for relational capital. The main research goal is to extend the previous literature on Intellectual capital, Financial performance and Brand management by elaborating and testing an original approach for valuating corporate brands using regression analysis on multiples based on firm-specific accounting data and market information. Design/methodology/approach – We propose two econometric models, for both listed and non-listed companies, which consider brand valuations made by primary consulting entities (Interbrand, Brand Finance, BrandZ, European Brand Institute) and multiples derived from accounting and market data of firms. Models were tested on a sample of non-financial firms for the period from 2006 to 2019, distinguishing between IAS/IFRS-based and US GAAP-based reporting standards. Findings – The empirical results show that the identified set of market and accounting multiples proved to be significant information for estimating the value of brands within the IAS/IFRS framework, while a lower explanatory power was assessed for US GAAP firms. Furthermore, the empirical evidence confirm that the direct, relative approach based on multiples is more accurate for valuating listed firms than nonlisted firms. Robustness analysis demonstrate that findings do not change significantly when the reference datasets and the main assumptions of the models are altered. Research limitations/implications – The statistical significance of the analysis is limited by the nonobjective nature of brand value estimates. The use of additional sources for brand valuations might allow for the further assessment of the robustness of the relationships identified. Practical implications – Due to their efficacy and ease of use, the proposed models represent valid practical tools for managers, investors, analysts and professional evaluators. Originality/value – This work contributes to the existing literature through the identification of significant, stable relationships between brand values and the main economic, financial and asset characteristics of firms; the identification of those relationships would allow for the extension of the multiples approach also to the evaluation of brands.
Laghi, E., Di Marcantonio, M., Cillo, V., Paoloni, N. (2020). The relational side of Intellectual capital: an empirical study on Brand value evaluation and financial performance. JOURNAL OF INTELLECTUAL CAPITAL [10.1108/JIC-05-2020-0167].
The relational side of Intellectual capital: an empirical study on Brand value evaluation and financial performance
Cillo V.;Paoloni N.
2020-01-01
Abstract
Purpose – This study aims to validate a direct method to measure relational capital through the estimation of corporate brands. Considering the influence of relational capital management in leading performance and brand development, we consider brand value as a proxy for relational capital. The main research goal is to extend the previous literature on Intellectual capital, Financial performance and Brand management by elaborating and testing an original approach for valuating corporate brands using regression analysis on multiples based on firm-specific accounting data and market information. Design/methodology/approach – We propose two econometric models, for both listed and non-listed companies, which consider brand valuations made by primary consulting entities (Interbrand, Brand Finance, BrandZ, European Brand Institute) and multiples derived from accounting and market data of firms. Models were tested on a sample of non-financial firms for the period from 2006 to 2019, distinguishing between IAS/IFRS-based and US GAAP-based reporting standards. Findings – The empirical results show that the identified set of market and accounting multiples proved to be significant information for estimating the value of brands within the IAS/IFRS framework, while a lower explanatory power was assessed for US GAAP firms. Furthermore, the empirical evidence confirm that the direct, relative approach based on multiples is more accurate for valuating listed firms than nonlisted firms. Robustness analysis demonstrate that findings do not change significantly when the reference datasets and the main assumptions of the models are altered. Research limitations/implications – The statistical significance of the analysis is limited by the nonobjective nature of brand value estimates. The use of additional sources for brand valuations might allow for the further assessment of the robustness of the relationships identified. Practical implications – Due to their efficacy and ease of use, the proposed models represent valid practical tools for managers, investors, analysts and professional evaluators. Originality/value – This work contributes to the existing literature through the identification of significant, stable relationships between brand values and the main economic, financial and asset characteristics of firms; the identification of those relationships would allow for the extension of the multiples approach also to the evaluation of brands.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
