Marketing Commons^™

The Buffering Effect Of Brands For Companies Facing Legislative Homogenization: Evidence From The Introduction Of Sarbanes-Oxley, Felipe Thomaz, Leonce Bargeron, John Hulland, Chad Zutter

Institute for the Study of Free Enterprise Working Papers

Brands not only enhance the positive impact of marketing initiatives, but also buffer the firm from the full consequences of unexpected and negative market shifts. While this protective effect has been demonstrated for firm-specific events (e.g., product recalls, public relations crises), its impact has not been observed in response to market-wide environmental shifts. Our study demonstrates the buffering properties of strong brands in exactly such a context: the passing of new legislation. By examining responses to the introduction of the Sarbanes-Oxley Act of 2002, we show that (1) firms exhibit a rapid and homogeneous response as they comply and adjust …