Valuing Branded Businesses

Journal of Marketing, Forthcoming

43 Pages Posted: 23 Apr 2008 Last revised: 14 Aug 2011

See all articles by Natalie Mizik

Natalie Mizik

University of North Carolina (UNC) at Chapel Hill; University of Washington

Robert Jacobson

University of Washington - Michael G. Foster School of Business; Diogenes Consulting

Date Written: November 15, 2008

Abstract

We present an approach for valuing branded businesses that enhances traditional multiplier-based valuation approaches by explicitly incorporating brand characteristics into the model. Empirical analysis indicates that valuation accuracy can be significantly improved by incorporating information about the properties of the firm's brand asset into a valuation framework. We find that brand metrics have statistically significant associations with valuation multipliers and add incremental explanatory power to accounting variables in explaining valuation multipliers. Out-of-sample analysis shows a 16% improvement in the mean absolute error for predictions taking into account brand metrics compared to predictions based on accounting variables alone.

Keywords: relative valuation, valuation multipliers, brand, intangible assests

JEL Classification: M31, M41

Suggested Citation

Mizik, Natalie and Mizik, Natalie and Jacobson, Robert and Jacobson, Robert, Valuing Branded Businesses (November 15, 2008). Journal of Marketing, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1124285

Natalie Mizik (Contact Author)

University of North Carolina (UNC) at Chapel Hill ( email )

102 Ridge Road
Chapel Hill, NC NC 27514
United States

University of Washington ( email )

Seattle, WA 98195
United States

Robert Jacobson

University of Washington - Michael G. Foster School of Business ( email )

Box 353200
Seattle, WA 98195-3200
United States
206-543-4780 (Phone)

Diogenes Consulting ( email )

2002 1st Avenue North
Seattle, WA 98109
United States

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