Use of Event Studies to Estimate Brand Value: A Comparison of Methodologies

Stock market event studies are often used to estimate the impact of an unanticipated event on stock returns of a company. Traditionally, these analyses focus on developing estimates of abnormal returns attributed to the event or some measure of post-event loss in shareholder value. In 1989 Mark Mitchell used an event study to estimate the impact of the 1982 Tylenol poisonings on Johnson & Johnson's share returns. Mark Mitchell was able to demonstrate that (1) Johnson & Johnson share returns were significantly impacted by the poisonings, and (2) such an impact translated, at least in part, to a depreciation of brand name capital. This study sets forth the basic framework of Mark Mitchell's 1989 analysis and wherever appropriate, provides possible alternatives to his methodologies. Using several alternative approaches including, but not necessarily limited to, consideration of the incremental values associated with the Tylenol brand name, cost to develop the brand, alternative market factors, and changes in income streams I compare changes in brand value to brand name capital depreciation estimated by Mitchell. In some instances the aforementioned approaches are used in conjunction with aspects of Mitchell's methodology. The results tend to provide more accurate estimates of the loss in brand value possibly associated with the 1982 poisonings.

Name thesis:degree_name

Master of Arts

Level thesis:degree_level

masters

Discipline thesis:degree_discipline

Economics

Department dc:contributor.department

Economics

Grantor dc:publisher

Virginia Tech

Year dc:date.issued

2002

Author dc:creator

• Pearsall, Nels A.

Chair dc:contributor.committeechair

• Waud, Roger N.

Committee members dc:contributor.committeemember

• Theroux, Richard
• Lutton, Thomas J.

• Intellectual Property
• Product Tampering
• Damages
• Event Study
• Market Analysis

Statement dc:rights

• In Copyright

Licence dc:rights.uri

• http://rightsstatements.org/vocab/InC/1.0/

Dc Identifier Other

etd-06182002-133039

OAI identifier oai:identifier

oai:vtechworks.lib.vt.edu:10919/9855