Identity change vs. strategy change: the effects of rebranding announcements on stock returns

Firm rebranding efforts are inevitable; however, we have a limited understanding of the nature and performance implications of those rebranding decisions. This research contributes to our understanding of this process by identifying two fundamental dimensions of rebranding decisions: brand identity...

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Bibliographic Details
Published inJournal of the Academy of Marketing Science Vol. 46; no. 5; pp. 795 - 812
Main Authors Zhao, Yanhui, Calantone, Roger J., Voorhees, Clay M.
Format Journal Article
LanguageEnglish
Published New York Springer US 01.09.2018
Springer
Springer Nature B.V
Subjects
Analysis
Brand identification
Brand identity
Brand image
Business and Management
Corporate planning
Influence
Marketing
Original Empirical Research
Social Sciences
Stocks
brand strategy change
brand identity change
competition
Corporate rebranding
abnormal return
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Summary:Firm rebranding efforts are inevitable; however, we have a limited understanding of the nature and performance implications of those rebranding decisions. This research contributes to our understanding of this process by identifying two fundamental dimensions of rebranding decisions: brand identity change and brand strategy change. More importantly, we identify and empirically test the conditions under which brand identity change and brand strategy change have either strong or weak (even negative) influences on firm value. Specifically, the results from analyzing 215 rebranding announcements suggest that (1) rebranding decisions, on average, are associated with positive abnormal stock returns in the (−5, +5) event window, and (2) investors use cues, like the fit among rebranding dimensions, firm competitive position, and industry competitive intensity, to make informed evaluations of firm future cash flows.
ISSN:0092-0703
1552-7824
DOI:10.1007/s11747-018-0579-4