Brand equity and stock performance in time of crisis: evidence from the COVID-19 pandemic

PurposeThis paper aims to investigate the impact of brand equity (BE) on stock performance (i.e. stock return, volatility and beta), and compare the performance of a high brand equity stocks (HBES) portfolio with that of the overall market during market downturn, market upturn and total disturbance periods of the COVID-19 pandemic in 2020.Design/methodology/approachStock performance data and brand valuation estimates are obtained from various sources to assemble a portfolio of HBES and conduct the analyses. Econometric models are estimated to examine the impact of BE on stock performance and compare the HBES portfolio performance versus the overall market.FindingsBE was positively associated with stock return and negatively associated with both types of risk (volatility and beta) during the COVID-19 pandemic. Specifically, during the market downturn period, BE was positively related to stock return and negatively related to stock volatility;during the market upturn period, BE was negatively associated with both types of risk;and during the total disturbance period, BE was positively associated with stock return and negatively associated with both types of risk. Finally, the HBES portfolio outperformed the market (S&P 500 index).Research limitations/implicationsThe findings advance the extant research by providing evidence pertaining to brands' role in mitigating the impact of unpredictable market shocks and crises, such as the COVID-19 pandemic, on stock performance. While brands are mostly viewed as drivers of sustained competitive advantage and profitability, their protective role in crisis times is noteworthy.Practical implicationsThe research findings potentially help marketing and brand managers to justify marketing spending and craft their strategies to enhance firm performance during crises similar to COVID-19.Originality/valueThe marketing–finance interface can benefit from insights offered by the COVID-19 pandemic, as such crises are becoming prevalent and are capable of damaging various stakeholders' outcomes (firms, investors and customers). The empirical examination is separately conducted on the market downturn, market upturn and total disturbance period attributable to the COVID-19 pandemic.

Related Return Patterns Adjustment Under the Impact of COVID-19 on Hedge Funds

The latest threat to global health is an ongoing outbreak of a respiratory disease known as COVID-19 and has become a global concern. The exponential spread of the COVID-19 pandemic shook up global markets and caused major adjustments to the world economy. In this paper, we investigate whether these changes affected hedge fund return patterns. We decompose hedge fund index returns into Fama-French factors using data from 2017 - 2019 and compare it to decompositions using data from 2020 and 2021 to date. Our empirical results suggest that the Fama-French factor exposures changed on the conventional hedge funds. This has reflected that COVID-19 has an impact on the return patterns of the hedge funds we selected. The findings have implications for investors and major players in the investment markets. Our research is useful for predicting how the performance of hedge funds changes in market disruption. © 2022 ACM.

Brand equity and stock performance in time of crisis: evidence from the COVID-19 pandemic

Purpose This paper aims to investigate the impact of brand equity (BE) on stock performance (i.e. stock return, volatility and beta), and compare the performance of a high brand equity stocks (HBES) portfolio with that of the overall market during market downturn, market upturn and total disturbance periods of the COVID-19 pandemic in 2020. Design/methodology/approach Stock performance data and brand valuation estimates are obtained from various sources to assemble a portfolio of HBES and conduct the analyses. Econometric models are estimated to examine the impact of BE on stock performance and compare the HBES portfolio performance versus the overall market. Findings BE was positively associated with stock return and negatively associated with both types of risk (volatility and beta) during the COVID-19 pandemic. Specifically, during the market downturn period, BE was positively related to stock return and negatively related to stock volatility;during the market upturn period, BE was negatively associated with both types of risk;and during the total disturbance period, BE was positively associated with stock return and negatively associated with both types of risk. Finally, the HBES portfolio outperformed the market (S&P 500 index). Research limitations/implications The findings advance the extant research by providing evidence pertaining to brands' role in mitigating the impact of unpredictable market shocks and crises, such as the COVID-19 pandemic, on stock performance. While brands are mostly viewed as drivers of sustained competitive advantage and profitability, their protective role in crisis times is noteworthy. Practical implications The research findings potentially help marketing and brand managers to justify marketing spending and craft their strategies to enhance firm performance during crises similar to COVID-19. Originality/value The marketing-finance interface can benefit from insights offered by the COVID-19 pandemic, as such crises are becoming prevalent and are capable of damaging various stakeholders' outcomes (firms, investors and customers). The empirical examination is separately conducted on the market downturn, market upturn and total disturbance period attributable to the COVID-19 pandemic.

Investing style and sensitivity analysis in U.S. stock market during Covid-19 based on multi-factor model

According to the unimaginable influence of Covid-19 and the essential of capital asset pricing in the market, this article analyzes the TV industry of the US stock market before and during the epidemic based on the Fama-French five-factor model. Fama-French five-factor model comprehensively considers the impact of market risk premium (Mkt-RF), market value scale factor, (SMB), book-to-market value ratio factor (HML), profit factor (RMW) and investment factor (CMA) on this industry. Meanwhile, it can conduct a comprehensive evaluation of the impact of Covid-19 on the TV industry. The data in this article was selected from Kenneth R. French's databases and used multiple linear regression to obtain the results. The performance of factors is different due to the outbreak of Covid-19. By analyzing the result, it found that Mkt-RF, SMB are not significant in the model, but HML, RMW, CMA have changed from insignificant to significant. It indicates that during the Covid-19, investors are recommended to pay more attention to the firms with high book-to-market ratios, stable profitability, and aggressive investment style in the USA TV industry. Therefore, research on the stock market of the TV industry plays an important role in the steady development of the economy, the creation of social wealth, and the improvement of people's living standards. © 2021 IEEE.

Research on the Impact of COVID-19 on Book Industry based on Fama-French Five Factor Model

Asset pricing has been regarded as a popular subject in modern financial research. Covid-19 has imposed a remarkably severe impact on the global economy. Taking the book industry of 49 industries in the French database for analysis, the paper classifies the daily data into pre-epidemic (June 2019-February 2020) and post-epidemic (March 2020-November 2020), and calculates multiple factor coefficients via multiple linear regression. According to the research findings, the book market became sensitive to the impact of the epidemic, while value stocks and firms with stable revenues are favored. There has been no impact caused by the epidemic on the small-scale effect of the industry, with the investment profile factor consistently failing. It is suggested that investors can consider the companies with small market capitalization, high book-to-market ratios, and stable earnings during the outbreak of epidemic. © 2021 IEEE.

Analysis of the effect on US manufacture industry during Covid-19 based on Fama-French five-factor model

It is crucial to find the fair value of financial assets for asset pricing model in relevant research and practice. With continuous improvement of the model, researchers are expected to improve the applicability and interpretation ability. Covid-19 is a rare global epidemic disease in human history, causing large-scale negative impact on the financial market. Therefore, it is necessary to study the practicability of asset pricing model, facing major and unpredictable factors. Based on the Fama French five-factor model, this paper compares the model factors of American manufacturing stocks from July 2019 to February 2020, and March 2020 to October 2020. The data mentioned in this paper are all selected from the database of Kenneth R. French's web. French, using the relevant information of American stock market to get various data. Multiple linear regression method and t-test are applied to analyze. The results showed that intercept investment. The asset pricing model changed from non-significant before the epidemic to significant;SMB coefficient is significant both before and after the epidemic, while coefficient increases after the epidemic;RMW is significant before the epidemic and is non-significant after the epidemic;MKT coefficient is significant both before and after the epidemic;CMA is non-significant both before and after the epidemic. Investors are advised to focus more on the explanatory power of MKT, SMB and HML factors on asset pricing when investing on US manufacturing stocks during the epidemic. © 2021 IEEE.

Research on the impact of Covid-19 to the clothing industry based on fama-french model

During the Covid-19 pandemic period, the U.S. government and the Federal Reserve started a radical monetary simulation plan to save the economy. The current capital market experiences more fluctuation and are more unpredictable. Capital asset pricing tools are more important at such a special time. This article uses the Fama-French five-factor Model and analyzes the clothing industry in the United States from July 2019 to November 2020, separating into pre and post pandemic periods. The regression analysis performed contains five coefficient factors, and each corresponds to a specific property of the clothing industry after Covid-19 emerged. The market factor indicates that the clothing industry is negatively affected by the pandemic. SMB shows that small businesses are more favorable to investors. HML indicates that value stocks are more preferred. RMW shows that investors tend to look for companies with higher profitability, whereas CMA indicates a minimal change to the clothing industry. It is recommended that more attention should be paid to the companies with small-cap, high BM ratio and stable profitability. © 2021 ACM.

Analysis of the investment trend of boxes industry during the COVID-19 pandemic based on the fama-french five-factor model

In early 2020, the outbreak of the COVID-19 severely hits the global economy. With the closure of many manufacturing industries, a large number of employees have lost their jobs, residential consumption fells rapidly and many firms go bankrupt. Under such background, this paper investigates the impact of the epidemic on the Boxes industry and analyzes the changes of each factor in the Boxes industry before and after the epidemic using the Fama-French five-factor model. The results show that the coefficient of market factor decreases due to the epidemic. It indicates that the industry is less sensitive to market volatility and the size factor becomes redundant. The BM ration factor changes from redundant to significant and the coefficient is positive, which indicates that investors prefer value stocks in the Boxes industry after the epidemic. The profitability factor is always redundant and the investment style factor changes from significant to redundant, showing that the COVID-19 pandemic brings opportunities and challenges to the whole industry. It also indicates that companies with a high book-to-market ratio and stable development in the Boxes industry are more valuable for investment recommendation during the epidemic. © 2021 ACM.