Actuarial Brand Valuation

by R. Krishnaswamy on April 11, 2010

Our paper focuses on the application of the actuarial methodology to corporate finance. One of the contemporary concerns in Applied Corporate Finance has been the valuation of intangible assets in general and valuation of brands in particular.  In a recent survey conducted among the CEOs of software companies in India, it has been found that one of the reasons for seeking overseas listing of their equity stocks has been to promote greater visibility for their corporate brand.  Given the growing awareness about placing a value on the brands they own, many corporates like Infosys and BPL have been using different methodologies for valuing brands.  Our analysis of the annual reports of selected companies, which report brand valuation results revealed that there is scope for honing these methodologies using actuarial inputs.

Clearly valuation of brands call for valuation of uncertain patterns of the associated cashflows which is the traditional home of actuarial practice.  Having said that, we need to add in the same breath, that brand valuation is a multi-disciplinary exercise with actuarial input playing a major role in terms of lending credence to the end financial result.

Our paper on Actuarial Brand Valuation is divided into three parts.  The first part dwells on the key reasons for valuing brands through a set of real-life examples.  The second part summarises the distinctive features of the commonly used brand valuation methodologies.  The third part provides an actuarial framework for valuation of brands, which has been labelled as Actuarial Brand Valuation (ABC).  In this part, we have also reported our progress on applying this methodology to brand valuation of companies in the financial services industry (termed as the “Credence” goods industry in the literature on brand management).

{ 1 comment… read it below or add one }

Upasana Diwan July 4, 2012 at 8:48 am

Dear Sir,!
Greetings for the day!
I am a research scholar at BIT in this area, it would do wonders if i can get this paper to read.
Cant, thank you enough!!
Regards,
Upasana Diwan

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