Journal of Financial Economics Vol. 110 No. 1 2013
Brand perception, cash flow stability, and financial policy
Abstract
This paper demonstrates that intangible assets play an important role in financial policy. Using a proprietary database of consumer brand evaluation, I show that positive consumer attitude toward a firm's products alleviates financial frictions and provides additional net debt capacity, as measured by higher leverage and lower cash holdings. Brand perception affects financial policy through reducing overall firm riskiness, as strong consumer evaluations translate into lower future cash flow volatility as well as higher credit ratings for potentially volatile firms. The impact of brand is stronger among small firms, contradicting a number of reverse causality and omitted variables explanations.
- DOI
- 10.1016/j.jfineco.2013.05.002
- Volume
- 110
- Issue
- 1
- Pages
- 232-253
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref