DO COUNTRY-SPECIFIC FACTORS AFFECT THE VALUE RELEVANCE OF BRAND VALUE? AN EMPIRICAL ANALYSIS?

Intangible assets and especially brands are considered as determinants of firm value. Due to their growing importance, consulting firms (e.g., Interbrand, Brand Finance and Millward Brand) publish annual reports on estimated brand values. Prior literature find that the brand values provided by independent parties are reflected on stock prices and therefore they are value relevant (Barth et al., 1998). The results prove that these non-accounting values represent a source of information for investors. However, the relationship between brand values and stock prices could differ across countries. Previous studies reveal that the value relevance of accounting variables diverges on a country basis and identify several country-specific factors which affect the information content of accounting variables. These factors are referred to the legal system, the accounting regulation and the financial system (market-oriented vs bank-oriented) of the different countries. To our knowledge, no studies test the effect of country-specific factors on the value relevance of non-accounting information. The aim of this study is to investigate whether the value relevance of brand values provided by third independent parties differs across countries. Furthermore, we test if all country-specific factors examined affect the relationship between stock prices and non-accounting information. The analysis is based on a sample of brand values provided by Interbrand, Brand Finance and Millward Brand (BrandZ). These brands are owned by companies listed in different stock markets. This work has both theoretical and practical contributions. It fills the gap in the literature by providing evidence about the influence of country-specific factors on the value relevance of non-accounting information. Also, the results could help investors in their decision-making process, providing more tools to analyse the ability of stock prices to capture non-accounting information in different institutional context.