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“In Brand We Trust”: How Brand Equity Can Influence a Firm’s Default Risk

  • Chi Zhang ORCID logo , Zi Nie EMAIL logo und Meizhe Song
Veröffentlicht/Copyright: 7. November 2025
Review of Marketing Science
Aus der Zeitschrift Review of Marketing Science

Abstract

As the downward pressure on the economy increases, firms are faced with increasing default risk, risk prevention is imminent. Brand equity, as a crucial intangible asset, holds significant importance in driving firm development. Using a dataset of firms in China, this paper examines the relationship between brand equity and firms’ default risk, with a focus on the mechanisms through how brand equity mitigates default risk and the moderating role of product market competition. The results reveal that brand equity significantly reduces firms’ default risk by mitigating operating risk and lowering debt financing costs. Additionally, product market competition amplifies this default risk-reducing effect, highlighting the heightened importance of brand equity in highly competitive environments. This research makes a multidisciplinary contribution to both marketing and financial risk management literature, offering valuable theoretical insights and practical implications.


Corresponding author: Zi Nie, School of Management, Wuhan Textile University, Wuhan, Hubei, China, E-mail:

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Received: 2025-04-12
Accepted: 2025-10-14
Published Online: 2025-11-07

© 2025 Walter de Gruyter GmbH, Berlin/Boston

Heruntergeladen am 17.1.2026 von https://www.degruyterbrill.com/document/doi/10.1515/roms-2025-0055/pdf
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