“Marketing Strategy Meets Wall Street”: A Research Proposal for MSI-EmoryBI “The Effect of Brand Acquisition and Disposal on Stock Returns”

1 " The Effect of Brand Acquisition and Disposal on Stock Returns " Abstract Firms operating in consumer markets generally manage portfolios of brands and make corporate-level investment decisions regarding additions to and subtractions from their portfolio through brand acquisition and disposal. While a commonly observed phenomenon, we know little about the performance effects of firm decisions to acquire or dispose of brands. Here, using the resource-based view as a theoretical lens and an event study methodology, we examine stock market reactions to firms' brand acquisition and disposal announcements in the consumer packaged goods industry. Initial findings on a sample of 188 brand acquisitions and 128 brand disposals over the period 1994 through 2006 suggest that firms disposing of brand assets enjoy abnormal stock returns while firms acquiring brands do not. Drawing on strategic factor market theory and the diversification literature in strategic management, we identify a number of boundary conditions under which firms may benefit from acquiring brands and benefit more or less from disposing of brands.