The Stock Market and Brand Equity: A Quantitative Study on the Swedish Stock Market's Reaction to Long- and Short-term Changes in Brand Equity

Abstract: Brand equity is a well-established term within the field of marketing, commonly used to describe the value of a brand name and its associations. Through an analysis of how the changes in brand equity of 15 companies listed on the Swedish stock exchange correlates with their stock prices, along with an event study of different negative company-related incidents, and a survey study of how these incidents are perceived by the Swedish public, the aim of this thesis paper is to answer our proposed research questions (1) "To what extent does the price a stock is traded at adjust in response to long-term changes in brand equity?" and (2) "To what extent do company-related incidents cause a short-term negative reaction in brand equity and, consequently, a negative reaction in stock price and a positive reaction in trading volume?". Our results indicate that long-term brand equity to some extent influences stock price. We also find that incidents that affected the public's perception negatively, thus damaging brand equity, lead to a negative change in stock price, though only a certain type of incident lead to increased trading volume.