Journal Article

Wedded Bliss or Tainted Love? Stock Market Reactions to the Introduction of Cobranded Products

Cao, Zixia, Sorescu, Alina

2013

Overview

We examine whether cobranding-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 cobranded 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 we 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 cobranding relationship significantly increase the market reaction to cobranding announcements. Our findings provide important managerial guidelines for enhancing firm value through cobranding partnerships.

• Publisher: INFORMS,Institute for Operations Research and the Management Sciences
• Subject: Abnormal returns / Alliances / Analysis / Announcements / Brand names / Brands / Co-branding / cobranding / Competitive advantage / Consumer attitudes / Consumer goods / Consumers / Experimental methods / Firm value / Hypotheses / Investment analysis / Market value / Marketing / marketing alliances / Marketing research / new products / Packaged goods / Partnerships / Personal finance / Product development / Product introduction / Profits / propensity score matching / Propensity scores / R&D / Rates of return / Research & development / Securities markets / Shaving & shavers / Stock exchange / Stock exchanges / stock market reaction / Stock markets / Stock prices / Stockholders / Studies / U.S.A / Value