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Starka varumärken, starka finanser?

En studie av skillnaden i lönsamhet mellan starka och svaga varumärken


It is a common view that companies should focus on building brands to increase profitability and stabilize cash flows. However, building and keeping brands alive is costly. Many firms spend large sums on branding only because they are supposed to, without knowing if they will actually gain from it. Up to date, there is limited convincing evidence that branding actually contributes to shareholder value creation. This thesis aims to investigate the relationship between brand strength and profitability and shareholder value. We create a sample of 30 matched pairs, each consisting of one firm with a strong brand and one firm with a weak brand. We compare the strong and weak brands on the basis of four different profitability ratios, the volatility of these ratios, and the residual income they generate to shareholders. We show that the strong brands give higher return on invested capital and create more shareholder value, while there is no statistically significant difference in operating margin between the two groups. We show that one explaining factor to this ambiguity is that the strong brands have higher leverage, resulting in an increased return on equity. We also believe that hidden assets resulting from conservative accounting can contribute to explaining the results. Further, we cannot confirm that the profitability of the strong brands is less volatile than the profitability of the weak brands.

Författare

Mikael Fristedt Anna-Karin Janson

Lärosäte och institution

Handelshögskolan i Stockholm/Institutionen för redovisning och finansiering

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