Document Type

Article

Publication Date

9-10-2020

Abstract

Owning valuable brands enhances the financial well-being of firms not only through increased revenues and profitability but also by mitigating agency problems, earnings management, and financial reporting irregularities. Firms with high brand equity are less likely to have income-inflating discretionary accruals, announce earnings restatements, or experience SEC investigations. Brand equity reduces the likelihood of manipulation through incentive and opportunity channels, which we capture in CEO characteristics and compensation, and corporate governance measures. Brand equity reduces the likelihood of financial reporting irregularities more for durable goods firms and firms with shorter-tenured CEOs, as the latter are most vulnerable to performance pressures.

Comments

© The Author(s) 2020. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. Original published version available at https://doi.org/10.1093/rcfs/cfaa018

Publication Title

Review of Corporate Finance Studies

DOI

10.1093/rcfs/cfaa018

Available for download on Saturday, September 10, 2022

Included in

Finance Commons

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