Abstract: The present paper compares Forbes’ The World’s Most Valuable Brands rating
with the results of the author’s own method of evaluating brands’ yield.

Keywords: brand, yield, stocks, depositary receipt.
JEL Classification: F31, G15, G3, M3

PAVLOV, SERGEY (2014) "TOP INTERNATIONAL BRANDS VALUATION". Journal of Russian Review (ISSN 2313-1578), VOL. (0), 32-36.


1. Introduction

An integral part of many companies, brand, is an intangible asset that impacts directly on profitability of a business.

The present paper compares Forbes’ 2012 The World’s Most Valuable Brands rating with the results of its own evaluation based on the analyses of price and price to earnings ratio of ordinary stocks and depositary receipts issued by companies during the same period.

Since the method employed by Forbes differs from the one used in this paper, two questions are bound to arise:

  1. If Forbes’ method is considered perfect, will there be a significant relationship (e.g., regressional) between its results and the results obtained though the method used in the present paper?
  2. If Forbes’ method cannot be taken for a reference, what prompted the results obtained through the present paper’s method?

2. Prior Studies

Paving the way for the calculations presented below was the article The Company’s Brand Evaluation on the Base of the Financial Markets’ Instruments (Yandiev, 2007), a study introducing a novel approach to evaluating brand value growth, based on the following premises:

  1. Stock quotations on the domestic market reflect not only financial information about a company, but also the way it is perceived at the emotional level. This can be explained by the fact that, when valuating a company’s financial condition, local investors act under the influence of its brand, therefore unconsciously adjusting their estimates.
  2. On the foreign market, investors act more rationally because they are not influenced by the brand. It is possible to assume that a company’s depositary receipts quotation on the foreign market represents solely the objective financial information about it.
    In this case, the difference between stocks and depositary receipts performance represents a brand’s standing.
  3. A brand name product is a ‘portfolio’ of two interrelated products; one a tangible item presented in a branded package, something a man on the street would view as the company’s product proper; the other an intangible product, an emotional experience linked to the process of consuming the tangible product.

To better appreciate the last premise, take a BMW car as an example. On the one hand, it is a complex mechanical device made of metal and other materials, a vehicle. However, a car by any other manufacturer can satisfy a consumer’s demand for a personal vehicle just as efficiently. Nevertheless, in choosing a BMW car, the consumer does not merely buy an automobile, but also acquires certain emotional benefits linked to the ownership of this particular car: the sense of one’s status, pride, even daring. Satisfying a person’s need to experience these emotions is often more important than satisfying their need for a vehicle itself.

In other words, the car turns out to be merely a package containing the real product: an emotional experience. Consequently, an ordinary stock issued by a company is, in fact, a ‘portfolio’ of two notional financial assets, one issued to produce a ‘package product’, the other to produce an ‘emotion product’.

Proceeding from these premises, the study introduced the following model of evaluating the brand yield:



  • rs is yield of a common share on the domestic market
  • rp is yield of a depositary receipt on the foreign market
  • rb is brand yield
  • w is the weighing coefficient

The pivotal question of the study was how to calculate w. Another article, Yield of Brand (Mishin, 2011), suggested a correlation coefficient of common share to depositary receipt yield:


Therefore brand yield could be presented as


The method may be critized for the use of same weighing coefficient for all of the companies analyzed, while individual cases might have required adjustments to the value. This results in a marked variation among the resulting figures, as will be shown below. However, individual adjustments can be omitted to keep the technique universally applicable.

3. Methodology

This study analysed 28 companies from Forbes’ The World’s Most Valuable Brands list. We selected the companies that had depositary receipts on the foreign market at the beginning of 2012.

The data for the calculations were obtained from common share quotations on the domestic market as of January 2012 and 2013, provided by Bloomberg’s online service, and also depositary receipts quotations for the same dates, provided by J.P. Morgan’s adr.com online service.

  1. The first step in evaluating brand value growth is based on the method proposed in Mishin, 2011. The data series allow the analyst to evaluate common share yield r_s and depositary receipt yield rp for 2012, as well as establish the value of correlation coefficient corr(rs;rp). Once this is done, it is possible to calculate brand yield rb, and compare the resulting figures with Forbes’ growth evaluations to establish the correlation between the two.
  2. Step number two is checking whether there is a regression relationship between Forbes’ technique and the one described above, using the standard linear regressive model with the explanatory variable’s coefficient calculated via the least squares method.

The resulting equation of linear regression will help to determine how significant the relationship between the dependent and the explanatory variables is. It will also be possible to plot real values and estimates and see how accurate the model is in predicting dependent variable values.

The analysis was made using the Gretl econometrics package.

4. Calculations

The first method had placed the correlation coefficient at


 Evaluating brand yield is:


The resulting equation enabled the author to calculate the estimated brand yield values and compare them with Forbes’ figures:


Brand  Brand value growth (FORBES) Estimated growth
Adidas  23%  18.40%
Allianz 5% 107.63%
AXA 10% 105.24%
BMW 6% 95.10%
Burberry 13% 51.29%
Canon -11% 52.95%
Coach 1% 19.97%
Credit Suisse -9% 2.83%
Danone 13% -0.51%
Fujitsu -7% -0.71%
Heineken 7% 48.94%
Hermès 20% -12.79%
Honda 1% 123.87%
HSBC 0% 69.56%
Hyundai 21% -43.35%
ING 8% 137.60%
L'Oréal 16% 33.94%
Nestle 18% 3.99%
Nintendo -39% 2.39%
Nissan 17% 112.45%
Nokia -55% 36.93%
Porsche 16% 37.41%
Samsung 53% 137.79%
SAP 28% 142.25%
Siemens 1% 16.09%
Sony -20% -75.66%
Toyota 17% 170.72%
Volkswagen 16% 158.14%

This table shows that the results of the method employed in the present paper (Estimated growth) and the estimates given by Forbes differ considerabbly, which is indicated by the coefficient of the correlation between the two sets:


Let’s now turn to the analysis of the regression relationship between the variables FORBES и Estimated_growth.



The first model to run: FORBES is dependent on Estimated_growth


Null hypothesis: β=0; Gretl gives the following analysis report:

It is clear that Estimated_growth’s coefficient evaluation is only significant at the 10% level of significance, and the constant’s evaluation is almost totally insigificant. This shows that the quality of the model is not very high, which makes the plotting of observable values and the estimates hardly necessary.
The second (inverse) model to run; Estimated_growth is dependent on Forbes.




Forbes’ coefficient evaluation is significant at the 10% level of significance, and the constant’s evaluation is significant even at the 1% level. This model is of higher quality than the previous one, therefore it makes sense to check the graph.


The dual linear regression equation for this relationship is as follows:

5. Conclusions

  1. Forbes’ technique cannot be a frame of reference due to the fact that regression analysis has shown Estimated_growth to be dependent on Forbes. This is something completely illogical: objective mathematical calculations cannot produce results dependent on aggregated subjective expert opinion.
  2. Projected Estimated_growth values are more significant than the ones resulting from using the Forbes’ method because they represent peculiarities of a brand’s standing on the domestic market specifically. The present paper uses prices set for common shares on a stock exchange located in the brand’s home country, which seems more reasonable than trying to give expert assessment of its international standing.
  3. The companies which secured brand growth (more than 3% yield) in 2012 were:

    Brand Estimated growth
    Adidas 18.40%
    Allianz 107.63%
    AXA 105.24%
    BMW 95.10%
    Burberry 51.29%
    Canon 52.95%
    Coach 19.97%
    Heineken 48.94%
    Honda 123.87%
    HSBC 69.56%
    ING 137.60%
    L'Oréal 33.94%
    Nestle 3.99%
    Nissan 112.45%
    Nokia 36.93%
    Porsche 37.41%
    Samsung 137.79%
    SAP 142.25%
    Siemens 16.09%
    Toyota 170.72%
    Volkswagen 158.14%

  4. The companies which kept their brand value nearly static (yield of -3% to 3%) in 2012 were:

    Brand Estimated growth
    Credit Suisse 2.83%
    Danone  -0.51%
    Fujitsu -0.71%
    Nintendo 2.39%

  5. The companies which saw their brands losing value (yield of less than 3%) in 2012 were:

    Brand Estimated growth
    Hermès -12.79%
    Hyundai -43.35%
    Sony -75.66%

  6. The estimates for top/bottom performing brands (in absolute terms) of 2012 are corroborated by the accompanying real-life events.
    Toyota (170.72%): 2012 saw the company sprint ahead, with car production in Japan up by 26.9% and domestic sales up by 35.2% compared to previous year. Both indicators showed the business growing (for the first time in 2 years), beating its own record of domestic sales (2 411 890 cars). There were definitely good reasons for the growth of its brand value.
    Volkswagen (158.14%): The German automaker was keeping pace with its Japanese colleagues, with 2012 witnessing the company breaking its 40 year old record of sales in the US. Sales of Volkswagen-branded cars were up by 35.1%, Audi by 18.5%, Bentley by 23.3%, and Lamborghini by 52.9%.
    SAP (142.25%): In 2012 the company saw its consolidated revenues going up by 14%, breaking its own record. Software products and accompanying products sales rose by 16% (some 10.5%-12.5% above the projected levels). On the whole, the company showed signs of steady growth.
    Sony (-75.66%): In 2012 the company suffered losses of around $6.36 billion, the steepest dip in its history. In April 2012 Sony executives decided to cut 10 000 jobs (6% of the total number of employees). The reasons behind its brand’s negative value growth are self-evident.
    Hyundai (-43.45%): 2012 marked 2.2% fewer cars (667 496) sold by the company on its domestic market compared to the year before. Despite positive proceeds, its operational profits were down to 1.64 billion AUD (a reduction of 11.7%). Estimating its brand value growth as negative seems appropriate.

6. References

  1. M. Yandiev, The Company’s Brand Evaluation on the Base of the Financial Markets Instruments, Finance, No. 7, 2007. http://ssrn.com/abstract=1412085
  2. Badenhausen, The World’s Most Valuable Brands: Behind The Numbers [forbes.com] // - 2013.
  3. Mishin, Maxim S., Yield of Brand // - June 9, 2011. http://ssrn.com/abstract=2276610


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