What brand do I use for my new product? The impact of new product branding decisions on firm value

Larisa Kovalenko ◽  
Alina Sorescu ◽  
Mark B. Houston
2018 ◽  
Vol 13 (6) ◽  
pp. 1635-1655
Bikram Jit Singh Mann ◽  
Sonia Babbar

Purpose Before introducing new products, companies make announcements regarding the launch of the product which influences stock market yields of the announcing companies. Information content of the new product announcement has never been an exclusive focused stream of research. Therefore, an assessment of the impact of the content characteristics of the new product announcement on the shareholder value and the impact of source credibility (spokesperson) in making such announcements is a major gap in the existing literature. The paper aims to discuss these issues. Design/methodology/approach First, the standard event study methodology has been employed on the sample to measure the abnormal gains/losses accruing to the announcing firms. Second, moderated regression analysis (MRA) is employed to identify the characteristics of the new product announcement and to check the role of the spokesperson in creating shareholder value. Findings The results of the event study indicate that the abnormal returns are generated during the new product announcement. The results of MRA disclose the variables having a positive and a significant influence on the effective returns of the announcing companies. Likewise, the role of the spokesperson has come out brightly as a credible communicator. Originality/value The research provides a direction to the announcing companies regarding the content of the announcement leading to a positive perception among the investing community. Likewise, it also provides direction to the investor community about the characteristics of the announcement content they give weight age in forming a perception of strength in evaluating the new product announcement, to which they are largely unaware.

2019 ◽  
Vol 27 (4) ◽  
pp. 81-98 ◽  
M. Berk Talay ◽  
M. Billur Akdeniz ◽  
Michael Obal ◽  
Janell D. Townsend

Prior research indicates the importance of new product launches across international markets for firm performance. However, little is known about if, and how, new product launches in international markets drive firm financial value. This study examines the drivers of stock market reactions to a new product introduction in a foreign country, along with the moderating impact of cultural context. Using a sample of 1,154 products in 34 product categories launched in 48 countries between 2011 and 2018, the authors investigate how product characteristics such as product innovativeness and product type affect abnormal stock reactions to a new product launch event. Furthermore, the authors assess the role of the national culture by considering the individualism, uncertainty avoidance, and indulgence characteristics of the country where the new product is launched. Results of a mixed-effects estimation model indicate that product launches in international markets with innovativeness and hedonism characteristics positively affect firm value. The effects of culture are complex and multifarious, providing valuable insights regarding the impact of new product introductions in global markets on firm value.

Matthew E. Souther

Researchers disagree about the impact of board independence on firm value. The disagreement generally stems from the endogenous nature of board appointments. I add new evidence to this discussion by using a sample of closed-end funds to document the value-enhancing effects of independent boards. Using cross-sectional, difference-in-differences, and instrumental variables techniques, I address these endogeneity concerns and find consistent evidence that board independence is associated with higher firm value.

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