Explaining variation in market to book ratios: do corporate reputation ratings add explanatory power over and above brand values?

This study examines the importance of brand and corporate reputations in explaining variations in market-to-book value relationships. Using the 2006 Corebrand database of 500 companies with identifiable brand values and the 2006 Annual Survey of Corporate Reputation conducted by Fortune magazine and Hay Group, the study concludes that companies with high relative brand value and high relative corporate reputation ratings have significantly higher market-to-book ratios than companies with low relative brand value and low relative corporate reputation ratings. The results indicate that corporate reputation adds incremental explanatory value in explaining high book-to-market ratios.