Structure Features of Branding

<p>The research is topical, as there is a serious problem of underinvestment in such valuable intangible assets as brands. In this paper, I try to examine the influence of the brand on the shareholder value creation in Europe. The paper is divided in 3 chapters: Brand: basic concepts, Branding and Econometric model. In first two theoretical chapters the main tools and concepts of branding were described. In econometrical chapter the interpretation of results and tests for autocorrelation, heteroscedasticity, multicollinearity and &nbsp;normality of residuals are provided. The article on which my research is based - Madden, Fehle и Fournier &laquo;Brands Matter: An Empirical Demonstration of the Creation of Shareholder Value Through Branding&raquo; (2006). This research continues their work, but the more recent time period is used and the division of portfolios is a little bit different. The data was taken from the reliable resources. The brand values are taken from the rankings &ldquo;Best global brands&rdquo; according to Interbrand. The time period used in this paper is 2009 to 2013. The sample consists of 31 European companies. The regression method used in this paper is Ordinary Least Squares Method or OLS. The regression model used is Fama-French and Carhart four-factor model. The aim of the paper is to study and to analyze how effective branding helps to create shareholder value. The paper shows that results for weighted, growing and equal portfolios are significant. The coefficients for SMB, HML, and WML are insignificant; therefore excess returns are obtained due to value creation, but not risk-premium. The findings show that trading strategies based on long positions in companies owning strong brands generate positive excess return. The research will be helpful for boardrooms, to realize how brand capitals create shareholder value and investors, to develop trading strategy, considering for the effect of strong brands on return and firm value. Moreover, this paper will be useful for marketing managers, as they will be able to draw attention to long-term investment in building brand equity</p><p>&nbsp;In conclusion, this study showed that it is possible to earn a positive excess return by investing in a portfolio of the most valuable brands of European companies, and &nbsp;the level of risk of this portfolio will be less than the market level of risk. Thus, using data, accurate as possible results were provided. The findings indicate that there is a relationship between branding and shareholder value creation.</p>