The Impact of Marketing Brand Value on a Company’s Financial Performance

Abstract

This research examines the impact of brand equity on corporate financial performance, utilizing a dataset of 135 international companies spanning the period from 2005 to 2024. We examine the impact of brand power on essential financial parameters, including operational income, EBITDA, and market capitalization, by merging brand value data from Brand Finance with financial metrics from Bloomberg Database. Our research reveals a robust positive association between brand value and turnover, profitability, and market valuation, indicating that organizations with elevated brand value experience superior financial results. Our econometric analysis demonstrates that a $1 increase in brand value correlates with a $1.76 gain in turnover and a $0.16 rise in net income, underscoring the tangible financial advantages of robust branding. Furthermore, we observe that brand value influences non-operating income, presumably via enhanced financing conditions and reduced interest expenses. Despite apprehensions regarding overvaluation, our findings indicate that although brand value enhances share prices, it does not result in an unsustainable rise in price-to-earnings ratios. These insights highlight the strategic significance of brand investments, indicating that companies should prioritize brand-building efforts to enhance long-term profitability and market competitiveness. Subsequent research ought to examine the impact of branding across various industries and organizational scales.