Brand equity and financial performance: an institutional view

Abstract

Purpose

The purpose of this study is to investigate the influence of brand equity on corporate financial performance across various institutional factors in China, encompassing macro (regional economic development and product market development), meso (industry uncertainty), and micro (CEO overseas experience) levels.

Design/methodology/approach

Using archival data related to Chinese listed companies, this study employs standard error combined with fixed effect regression for model estimation to empirically evaluate the impact of brand equity on financial performance (Tobin’s q) and its boundary effects.

Findings

This study reveals that in China, the influence of brand equity on Tobin’s q isn’t significant. However, when considering institutional factors across various levels, its impact becomes significant. Specifically, the positive effect of brand equity on Tobin’s q in China is more pronounced in regions with higher economic or product market development, industries with high uncertainty, or when the CEO has overseas experience.

Research limitations/implications

This study enriches the brand-related marketing literature in China and highlights the potential underperformance of brand equity within this context. Furthermore, this study advances the integration of resource-based view with institutional theory by combining brand equity with institutional factors at the macro-, meso-, and micro-level in China.

Originality/value

This study focuses on brand performance in China, the largest emerging market, emphasizing the importance of integrating brand equity with diverse institutional factors to amplify its beneficial influence on financial performance.

Citation

Cheng, B. and Hou, S. (2024), "Brand equity and financial performance: an institutional view", Marketing Intelligence & Planning, Vol. 42 No. 8, pp. 1433-1463. https://doi.org/10.1108/MIP-01-2024-0049