Table Of ContentFinancial Information and Brand Value
Series Editor
Régine Teulier
Financial Information
and Brand Value
Reflections, Challenges and Limitations
Yves-Alain Ach
Sandra Rmadi-Saïd
First published 2020 in Great Britain and the United States by ISTE Ltd and John Wiley & Sons, Inc.
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ISBN 978-1-78630-567-1
Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix
Chapter 1. The Brand as a Source of Value Creation . . . . . . 1
1.1. The historical, legal and economic character
of the concept of a brand . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1.1. The brand’s historical character . . . . . . . . . . . . . . . . . 3
1.1.2. The brand’s legal character . . . . . . . . . . . . . . . . . . . . 7
1.1.3. The brand’s economic nature . . . . . . . . . . . . . . . . . . 14
1.2. Brand value and brand equity . . . . . . . . . . . . . . . . . . . . . 17
1.2.1. Definition of the brand value concept . . . . . . . . . . . . . 17
1.2.2. Definition of brand equity . . . . . . . . . . . . . . . . . . . . 20
Chapter 2. Brand Development . . . . . . . . . . . . . . . . . . . . . 29
2.1. The brand, an intangible asset . . . . . . . . . . . . . . . . . . . . 30
2.1.1. The growing role of the intangible . . . . . . . . . . . . . . . 30
2.1.2. The multiple concepts linked to the notion of assets . . . . . 31
2.1.3. The importance of intangible assets . . . . . . . . . . . . . . . 35
2.2. The valuation of brands: presentation of the different
standards and methods . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.2.1. Accounting standards related to brand valuation . . . . . . . 36
2.2.2. The main methods of brand valuation . . . . . . . . . . . . . 42
vi Financial Information and Brand Value
Chapter 3. Value Review and the Acquisition of the
GUCCI Brand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
3.1. The GUCCI brand . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
3.1.1. Presentation of the Pinault-Printemps-Redoute
and Gucci Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
3.1.2. Management of luxury brands . . . . . . . . . . . . . . . . . 65
3.1.3. The battle for the GUCCI brand . . . . . . . . . . . . . . . . 72
3.2. Analysis of the financial information disclosed by the
Pinault-Printemps-Redoute Group during the transaction . . . . . . 75
3.2.1. Recognition of the GUCCI brand in the financial
statements of the Pinault-Printemps-Redoute Group . . . . . . . . 75
3.2.2. GUCCI brand valuation methods . . . . . . . . . . . . . . . . 81
3.2.3. Brand valuation methods described in the financial
documents of the Pinault-Printemps-Redoute Group and
presented to shareholders . . . . . . . . . . . . . . . . . . . . . . . . 84
3.3. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Chapter 4. Analysis of the Practices of Thirty-Seven
International Companies . . . . . . . . . . . . . . . . . . . . . . . . . 91
4.1. Dissemination of financial information on real assets . . . . . . 91
4.1.1. The boundary between mandatory and voluntary
information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
4.1.2. The main vehicle for disseminating financial information . 94
4.1.3. Financial information and brand development . . . . . . . . 96
4.2. Empirical analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
4.2.1. Prior exploration . . . . . . . . . . . . . . . . . . . . . . . . . 98
4.2.2. Confirmatory analysis . . . . . . . . . . . . . . . . . . . . . . 100
4.2.3. The sampling method and the measuring
instruments used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
4.3. Determining a typology of information offer in relation
to brands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
4.3.1. Data processing mode . . . . . . . . . . . . . . . . . . . . . . 112
4.3.2. Processing of “Y” 2011 and “Y” 2012 years data . . . . . . 113
4.3.3. Presentation of results . . . . . . . . . . . . . . . . . . . . . . 115
Chapter 5. Determinants of Brand Disclosure . . . . . . . . . . 119
5.1. The offer of information related to brands . . . . . . . . . . . . . 119
5.1.1. Internal variables . . . . . . . . . . . . . . . . . . . . . . . . . 120
5.1.2. External variables . . . . . . . . . . . . . . . . . . . . . . . . . 121
Contents vii
5.2. Processing the data collected: measuring correlations . . . . . . 125
5.3. Presentation of results . . . . . . . . . . . . . . . . . . . . . . . . . 129
5.3.1. Test results for the year 2011 . . . . . . . . . . . . . . . . . . 129
5.3.2. Test results for the year 2012 . . . . . . . . . . . . . . . . . . 131
5.4. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
Introduction
For many years now, brands have become increasingly
important in the lives of companies. Yet nothing is more
difficult than defining what a brand is, as there are so many
different aspects to the concept. The brand is a company’s
most important asset. It enables it to build up a customer
base, to develop customer loyalty and to promote the
distribution of products, by means of a distinctive sign capable
of reaching the consumer. Brands can be found everywhere
and become an integral part of our living environment.
Brand valuation requires knowledge of the legal,
commercial, marketing, accounting, financial and tax
environment surrounding them. These elements cannot be
taken into account individually, unless a partial and
inaccurate estimate is made.
Perceived by investors as a source of value, the brand is,
however, not always recognized as a company asset. Indeed,
faced with the non-recognition of internally generated
brands as an asset, from an accounting perspective,
companies resort to the dissemination of additional
information as an alternative to inform investors about the
value of these intangible assets. This difference in the
accounting recognition of brands, depending on whether they
are acquired or internally generated, is not accurately
x Financial Information and Brand Value
reflected in the company’s assets and liabilities and visible to
its stakeholders, particularly to investors.
As a result, the financial statements relating to brands
provide little information on these items. With this in mind,
companies are led to propose a global offer of standardized
and voluntary information in their annual reports with
regard to the valuation of the brands they own and operate.
A review of the literature and works on brands has shown
the value of looking at the nature, characteristics and
determinants of the information disclosed by companies
regarding the brands they own and use.
The aim of this book is, on the one hand, to characterize the
nature of the information communicated by companies in
terms of estimating brand value and, on the other hand, to
identify the determinants of this information according to
companies’ characteristics.
This book is therefore divided into five chapters. Chapters 1
and 2 look at different perspectives of the brand and how to
create brand value. We examine the growing role of the
intangible in our economy, as well as the nature and
determination of brand value and brand equity.
In Chapter 3, we review the acquisition of the GUCCI
brand by the Pinault-Printemps-Redoute (PPR) Group (now
Kering), focusing primarily on the financial information
disclosed during this transaction and the valuation method
used for the acquisition of Gucci. This case study provides an
opportunity to discuss the disclosure of brand information and
the valuation of the brand as part of the PPR Group’s
strategic refocusing on luxury brands.
In Chapters 4 and 5, based on a sample of international
brands identified from the Brand Finance and Interbrand
databases, we explain the nature, characteristics and
Introduction xi
determinants of the information disclosed by companies in
relation to the brands they own and operate.
Our study will highlight the inadequacy of financial
communication and the need to take into account the
financial reporting of brands in supplementary parts of
annual reports. More specifically, we will discuss the need to
provide investors with more reliable, relevant and detailed
brand information. We will propose clear recommendations
to companies based on the discussion of our results.
