Wedded Bliss or Tainted Love?: Stock Market Reactions to the Introduction of Co-branded Products

December 2013 | Sorescu, Alina

We examine whether co-branding — the practice of using two established brand names on the same product — increases the market value of parent firms. Using data from the consumer packaged goods industry we document that the average stock market reaction to the announcement of co-branded new products is approximately +1.0%. We hypothesize that this reaction is significantly higher than it would have been if these same products were single-branded, and find evidence consistent with this hypothesis. We also examine the determinants of this stock market reaction. We find that the consistency between the two brand images, the innovativeness of the product, and the exclusivity of the co-branding relationship significantly increase the market reaction to co-branding announcements.  Our findings provide important managerial guidelines for enhancing firm value through co-branding partnerships.

Author

Co-author(s)

  • Zixia Cao

Publication(s)

Marketing Science

Web Link

https://www.researchgate.net/publication/259079456_Wedded_Bliss_or_Tainted_Love_Stock_Market_Reactions_to_the_Introduction_of_Cobranded_Products