The Influence of Brand Value on Selected Malaysian’s Companies Book Value and Shareholders
Pegah Rasti, Somaye Gharibvand
Review of Contemporary Business Research, 2(1), pp. 12-19.

Abstract

Purpose: Examine the influence of brand value on book value, and profit after interest and tax, and dividend yield in Malaysian companies.

Objectives

i: To determine the effect of growth brand value on book value in selecting the best brand of Malaysian companies.

ii: To identify the determinants that influence brand value on earnings before interest and tax (EBIT) and dividend yield (DY).

Methodology/Design/Approach:

Prior to testing the hypotheses, coefficient alpha, reliability, and correlation analysis were applied to determine the validity and reliability of the data collected. Multiple regressions were performed to test the hypotheses.

Research Implications

Results of this study show clearly that brand value has no influence on all of these parameters of financial performance of companies. According to results of this study, brand value has a positive influence on companies’ book value, and earnings before interest and tax.

Keywords: Brand equity, Brand value, Book value, Earnings before Interest and Tax, Dividend yield

1. Introduction

In general, the study of brand and effect of brand on company’s financial performance has become increasingly important to both finance and marketing sections. Therefore, Ailawadi, Lehmann, and Neslin(2001), and Capron and Hulland (1999) concluded that it is generally accepted that brands are major intangible assets that can significantly contribute to companies’ performance. Therefore in today’s business, brand equity and especially brand value is very important. The fluctuations in brand value of one company can affect financial performance that may cause significant changes, for example, it may influence financial performance measures (such as operating income, earnings before interest and tax, and net asset value). In this research, the author wants to find the influence of brand on financial performance in selected companies in Malaysia; in other words, to find the relationship between brand nvalue and details of companies financial statement; also, to determine the impact of brand growth on book value.

The author uses Asian companies and focuses on this area because there is less research about the specific area such as the Interbrand website for one country such as Malaysian companies that include several industries (such as banking, properties, insurance, entertainment, etc.)

2. Literature Review
2.1 Brand and Brand Equity
Figure 3.1: Conceptual Framework

H1: Brand value has positive influence on companies’ book value.

H2: Brand value has significant relationship with earnings before interest and tax (EBIT) and dividend

yield (DY) of companies.

3.2 Sampling and Methodology

The target population for this study is most valuable industries on Bursa Malaysia. The primary data was found from Interbrand (www.interbrand.com), The Association of Accredited Advertising Agents of Malaysia or 4A (www.aaaa.org.my) and Bursa Malaysia (www.klse.com.my) for most valuable brands in Malaysia that were introduced in that website. The customer companies included several industries such as banking, properties, telecom, and etc. The secondary data for this paper was collected from journal, articles, and reference books.

The sampling method that was being selected is the non-probability sampling. The sample size that we want to select is 30 valuable customer companies between years of 2007 to 2009 that was introduced by Interbrand (interbrand has the broadest geographical presence-offering more people, more disciplines, and more knowledge tailored to their clients). After that, we select 20 companies and compiled relevant data for the period of three years.

Based on the total 20 companies from best of valuable Malaysian companies, the following pie chart shows the percentage of each industry that is used in this analysis.

Figure 3.1: Pie Chart of Total Percentage of Industries

The analysis is based on the primary data collected from the companies. Collected data was keyed into the SPSS version 16 analysis software for the purpose of testing the outcomes. The analysis and discussions are divides into two sections. The first section is the descriptive analysis with the aim to understand the relationship between brand value and financial performance (based on scatter plots). The second section is hypothesis testing using regression to determine the influence of independent variable (brand value) on dependent variable (book value and shareholders). Further, regression is also carried out to test each of the dimensions.

In general, the formula of simple linear regression equation will be collected as follows:

Y = β0 + β1X1 + ϵ

In which: Y “Dependent Variable”, X “Independent Variable”, β0,1 “ Parameters”, ϵ : “ Error term”

4. Results and Discussion

In the first, table 4.1 explain a summary of results, after that we discussion about these results

Table 4.1: Result Summary

4.1 To Determine the Effect of Growth Brand Value on Book Value in Selected Best Brands of Malaysian Companies.

According to the data analysis in order to discover the relationship between book value and brand value in each year (2007, 2008, and 2009) and mix data of three years; the results show that:

 The scatter plot shows the increase line in the matrix, so this means the relation between book value and brand value is near to 1 and there is positive relationship between two variables.

Figure 4.1: Scatter Plot of Mixed Three Years Data (2007-2009) for brand value and book value.

 Correlation table shows the Pearson correlation above 0.600 with p-value 0.000 that it is less than 0.05. This is indicative of a positive relationship between the two variables.

Table 4.2: Correlation of brand value and book value Data in 2007-2009

 The p-value is near to 0.000 and it is less than 0.05. This means brand value can be used to predict book value. R-square is about 0.400, this means 40% of the fluctuation in book value is explained by brand value. The regression equation shows the positive relationship between brand value and book value.

Table 4.3: Model Summary of Brand Value and Book Value in 2007-2009

b. Predictors : (constant), Brv Dependent variable: BV

Table 4.4: ANOVA of Brand Value and Book Value in 2007-2009

Predictors : (constant), Brv Dependent variable: BV

The general formula for relations between brand value and book value where: Y = 2788.702 + 1.813 X

Table 4.5: Coefficients of Brand Value and Book Value in 2007-2009

4.2 To Identify the Determinants that Influence Brand Value on Earnings before Interest and Tax(EBIT) and Dividend Yield (DY).

a) Earnings Before Interest and Tax (EBIT)

 The scatter plot showed the increased line in the matrix, so this means the relation between EBIT and brand value is near to 1, so it shows positive relationship between the two variables.

Figure 4.2: Scatter Plot of Mixed Three Years Data (2007-2009) for brand value and EBIT

 Correlation table shows that the Pearson correlation is above 0.700 with p-value 0.000 and it is less than 0.05. This is indicative of a positive relationship between brand value and EBIT.

Table 4.6: Correlation of brand value and EBIT Data in 2007-2009

The p-value is near to 0.000 that it is less than 0.05. This means brand value can be used to predict EBIT. R-square is about 0.500, this means 50% of the variation in EBIT is explained by brand value. The regression equation shows the positive relationship between brand value and book value with pvalue less than 0.05.

Table 4.7: Model Summary of Brand Value and EBIT in 2007-2009

Predictors : (constant), Brv Dependent variable: EBIT

Table 4.8: ANOVA of Brand Value and EBIT in 2007-2009

Predictors : (constant), Brv Dependent variable: EBIT

The general equation for this relation is equal to:

EBIT = 464.089 + 0.414(Brand Value)

Table 4.9: Coefficients of Brand Value and EBIT in 2007-2009

b) Dividend Yield (DY)

According to results of data analysis, there is no relationship between brand value and dividend yield. Since the scatter plot shows the line of data as similar points are distributed in the matrix. Also, the Pearson correlation is a low value with p-value more than 0.05. Referring to the regression equation, which shows the relationship between these two variables is equal to zero with p-value more than 0.05.

Table 4.10: Correlation of brand value and dividend yield Data in 2007-2009
Table 4.11: Model summary of Brand Value and DY in 2007-2009

Predictors : (constant), Brv Dependent variable: DY

Table 4.12: ANOVA of Brand Value and DY in 2007-2009

Predictors : (constant), Brv Dependent variable: DY

Table 4.13: Coefficients of Brand Value and DY in 2007-2009
4.3 Conclusion and Recommendation

In general, after data analysis and the results based on the sampled companies in this research have been collected, the influence of the brand value can be book value (BV) and earnings before interest and tax (EBIT); also according to the results, the brand value cannot be used to predict dividend yield (DY). This study only extracted a few sample brands due to unavailability of data during the study time. Therefore, the result cannot be generalized appropriately. The sample of data must be enlarged in order to attain an important result. The limitation of this study can be pointed to government procurement transparency, financial system and e-commerce may affect the economics of developing countries and political stability. In Malaysia, the shift to the Disclosure Based Regulatory (DBR) is a significant step in guaranteeing the whole process of increasing funds is effective and a competitive exercise to increase funds for issuers, in line with the plan to set up Malaysia as a preferred raising of fund centre for companies in Malaysia, as declared in the market capital.