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1 – 2 of 2Maryam Farhang, Omid Kamran-Disfani and Arash H. Zadeh
This paper aims to investigate the impact of brand equity (BE) on stock performance (i.e. stock return, volatility and beta), and compare the performance of a high brand equity…
Abstract
Purpose
This paper aims to investigate the impact of brand equity (BE) on stock performance (i.e. stock return, volatility and beta), and compare the performance of a high brand equity stocks (HBES) portfolio with that of the overall market during market downturn, market upturn and total disturbance periods of the COVID-19 pandemic in 2020.
Design/methodology/approach
Stock performance data and brand valuation estimates are obtained from various sources to assemble a portfolio of HBES and conduct the analyses. Econometric models are estimated to examine the impact of BE on stock performance and compare the HBES portfolio performance versus the overall market.
Findings
BE was positively associated with stock return and negatively associated with both types of risk (volatility and beta) during the COVID-19 pandemic. Specifically, during the market downturn period, BE was positively related to stock return and negatively related to stock volatility; during the market upturn period, BE was negatively associated with both types of risk; and during the total disturbance period, BE was positively associated with stock return and negatively associated with both types of risk. Finally, the HBES portfolio outperformed the market (S&P 500 index).
Research limitations/implications
The findings advance the extant research by providing evidence pertaining to brands' role in mitigating the impact of unpredictable market shocks and crises, such as the COVID-19 pandemic, on stock performance. While brands are mostly viewed as drivers of sustained competitive advantage and profitability, their protective role in crisis times is noteworthy.
Practical implications
The research findings potentially help marketing and brand managers to justify marketing spending and craft their strategies to enhance firm performance during crises similar to COVID-19.
Originality/value
The marketing–finance interface can benefit from insights offered by the COVID-19 pandemic, as such crises are becoming prevalent and are capable of damaging various stakeholders' outcomes (firms, investors and customers). The empirical examination is separately conducted on the market downturn, market upturn and total disturbance period attributable to the COVID-19 pandemic.
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Sina Aghaie, Omid Kamran-Disfani, Amir Javadinia, Maryam Farhang and Ashok Bhattarai
The purpose of this study is to empirically investigate the impact of incumbents’ defensive strategies, specifically price-cut and capacity expansion, on new entrants’ (NEs) exit…
Abstract
Purpose
The purpose of this study is to empirically investigate the impact of incumbents’ defensive strategies, specifically price-cut and capacity expansion, on new entrants’ (NEs) exit decisions and examine the moderating role of incumbents’ relational market-based assets (RMBAs).
Design/methodology/approach
Drawing upon real options theory, an empirical study using logistic regression is conducted on a rich, multi-market data set of NE exits between 1997 and 2019 in the U.S. airline industry.
Findings
Contrary to intuitive expectation, the results show that cutting prices in response to entry reduces NEs’ likelihood of market exit. However, when incumbents possess strong RMBAs, using a price cut proves to be effective in pushing NEs out of a market. Moreover, an NEs’ exit likelihood is higher when incumbents expand capacities in response to entry.
Research limitations/implications
In this study, market exit is defined as a complete withdrawal from the market and operationalized as a binary variable. Future research could examine different degrees of downscaling by NEs while remaining in the market.
Practical implications
This research demonstrates the opposing effects of price-cut and capacity expansion and the crucial role of RMBAs and advises managers to be cautious and consider trade-offs when implementing their defensive strategies to push NEs out of their markets.
Originality/value
This study contributes to the literature by examining the impact of incumbents’ defensive strategies, price-cut and capacity expansion, side by side and exploring the moderating role of RMBAs. Extant research has focused on antecedents of defensive strategies, whereas the consequences are the focus of this research.
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