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Study proves brand name impact

Adham Chehab, professor of finance, presents his research in the lecture “Brand Capital and Shareholder Equity: The Effect of Brand Value on Stock Performance and Economic Benefits,” Monday in the President’s Dining Room. Before beginning his teaching career at La Verne in 2002, Chehab taught at the University of New Orleans. / photo by Jessica Harsen

Adham Chehab, professor of finance, presents his research in the lecture “Brand Capital and Shareholder Equity: The Effect of Brand Value on Stock Performance and Economic Benefits,” Monday in the President’s Dining Room. Before beginning his teaching career at La Verne in 2002, Chehab taught at the University of New Orleans. / photo by Jessica Harsen

Amanda Larsh
Staff Writer

In the University’s latest faculty lecture, professors Adham Chehab, Jeanny Liu and Yibo Xiao discussed whether positive relationships existed between brand value and earnings, and brand value and stock market reaction.

The three teamed up for the lecture “Brand Capital and Shareholder Equity: The Effect of Brand Value on Stock Performance and Economic Benefits,” showcasing the positive results of their study.

“When you recognize the brand, there’s a higher probability you’ll use them,” said Chehab, professor of business administration. “You know what you’re getting.”

“Do consumers and the stock market react to brand value?” asked Xiao, assistant professor of finance, before starting their study.

By looking at all aspects of their research, the team proved brand stability benefitted not only the company’s sales, but the price of their stocks.

“Making the 100 most valuable global brand list leads to positive earnings for the company,” Chehab said, noting that both the company’s stock price and sales revenue, increased after making the list.

Of the brands observed, Coca-Cola was the most profitable brand, making over $70 billion in 2012. Apple and IBM were not far behind.

Liu, an associate professor of marketing, explained the difference between generic and name brand products by comparing the choice to purchase Tylenol over acetaminophen.

Although the FDA recognizes the two are the same, some people still choose Tylenol because it’s a brand they decided to trust, despite the fact it is more expensive.

Chehab was the main number cruncher for the group, gathering data and performing tests to understand what the numbers meant.

By crunching data on companies like Coca-Cola, Apple, Gillette and IBM, the team was able to begin to answer their hypothesis.

Xiao talked about the brands the team focused on, citing a yearly survey of the best global brands as the motivation behind the companies observed.

She explained the importance of customer satisfaction with a product and how it had a positive impact on stock prices and returns.

Liu explained what marketing was and how numerous aspects of the economy and society affect the value of everyday items. She compared the desirability of Starbucks coffee to that of normal coffee and claimed that based on their brand recognition, Starbucks is able to charge more for their product because people are either willing to pay the price or want to be seen with it.

“Right off the bat, appoint yourself leader, otherwise they’ll fight you,” said Chehab of the difficulties the team faced collaborating.

“It’s important to collaborate with different departments,” said Rita Thakur, the associate dean for the college of business and public management, and a professor of management.

The team created a well-balanced presentation by providing different points of views and skills from different departmental backgrounds.

“When you have faculty working together, they become friends and bring different viewpoints from different departments into their classrooms,” Thakur said.

Thakur went on to congratulate the trio’s work, claiming that interdepartmental collaboration encourages University faculty to work together, creating a more cohesive school that benefits students.

Amanda Larsh can be reached at amanda.larsh@laverne.edu.

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