Companies boost market value with good brand affiliation and reputation

Takeaway: There is a measurable difference in the market value of companies with good reputation and brand affiliation when compared to their actual book value. Brand and reputation have the potential to raise the market value of companies, over and above the book value of the company. Companies have the opportunity to improve their market value an average of seven times above their current book value with good brand and reputation ratings.

This study examines the importance of brand and corporate reputations in explaining variations in market-to-book value relationships and concludes that companies with high relative brand value and high relative corporate reputation ratings have significantly higher market-to-book ratios than companies with low relative brand value and low relative corporate reputation ratings. The results indicate that corporate reputation and brand add incremental explanatory value in explaining high book-to-market ratios.

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