5. Summary and conclusion
We obtained the list of the 100 most valuable global brands from Interbrand for 2001 through 2012. Several companies estimate the value of brands and publish their findings. One such company is Interbrand which annually publishes a list of the 100 most valuable global brands. The list excludes some well-known brands such as Walmart, Disney, and Macy's because they are not global; their operation and sales are mostly regional. We analyzed the stock market reaction to the non-financial American brands that were recognized by Interbrand. To evaluate the immediate stock market reaction to the recognition of brands, we calculated the cumulative abnormal returns (CARs) for the analysis period, 2001 through 2012. The stocks in the sample earned eleven-day cumulative abnormal returns (CARs) of 0.54% (17.79% annually) and three-day CARs of 0.31% (37.97% annually) from 2001 through 2012. The CARs were significant at the 1% level. We furtherfound that the variable BRND_M, a measure of the contribution of brand value to market value above capitalization, is a statistically significant determinant of the abnormal returns. Robustness tests using the Carhart model confirms the results obtained from measuring the CARs. The four-factor monthly alpha averaged 1.1428% (13.7136% annually) over the risk-free rate and 1.3317% (15.9804% annually) over the S&P 500 index. The empirical results show that both our hypotheses are supported and significant.
