Counterfeiting and brand protection issues are important, but under-investigated in the marketing literature. Much of prior literature on counterfeiting and brand protection so far examine these topics from the consumers’ perspective. However, companies and their managers need guidance to understand how to strategically allocate resources to better protect their brands, and how these brand protection activities are associated with firms’ financial performance. My dissertation comprises of two essays that provide an in-depth and comprehensive investigation of this topic from a financial perspective. Specifically, building on a systematic and extensive literature review of the literature on anti-counterfeits and brand protection actions, I study the effects of various types of firm actions to counterfeits from a marketing perspective focusing on brand protection actions (i.e., marketing-mix responses to the brand infringement). Specifically, in essay one, building on signaling theory I focus on how firms’ brand protection actions affect stock market returns, as well as the boundary conditions for these effects. Specifically, I explore the links between different types of marketing action that managers implement to protect their brands on short-term and long-term stock market returns. In addition, I identify several key contingencies that affect the strength of the relationship between brand protection actions and firm value. The results shows that brand protection actions are associated with both a positive short-term stock market reaction and positive long-term carryover effects on firm value. Importantly, the study demonstrates that investors seem to favor marketing actions over legal actions in the long run. This essay also finds that promotion-related actions have stronger effects compared to non-promotion-related actions. Finally, the findings indicate that, compared with other types of brand protection actions, promotion-related actions are associated with higher stock market prices when host countries’ intellectual property rights protection is stronger; however, brand protection commitment weakens the effect of promotion-related marketing actions on firm value. Moreover, brand threat context (online versus offline) also impacts the firms’ marketing brand protection actions on firm value. In essay two, I aim to further explore the impact of firms’ brand protection actions on stock market reactions with a specific focus on the signaling environment. Specifically, this essay provides a detailed examination of the relationship between brand protection actions and firm risk, as well as the moderators of this relationship. I incorporate the idea of the country institutional profile to theorize and test a series of hypotheses that predict the contingency effects of regulatory, cognitive, and normative components of the country institutional profile, on explaining the variability of the main effect strength. In particular, my study demonstrates that brand protection actions do have a significant impact on firm-idiosyncratic risk, such that promotion-related brand protection actions are considered less risky compared to other types of marketing actions. In terms of the moderating effects, three interrelated but distinct aspects of a country institutional profiles exert different influences in this scenario. The results suggest that when the host country’s IPR protection is stronger, the risk mitigation effect of promotion-related actions would be stronger compared to other types of actions. For the other two components, the effect is opposite and also significant. The higher the host country’s long-term orientation and regulatory quality, the fewer advantages promotion-related actions would possess compared to other types of actions in terms of risk reduction. Overall, this dissertation offers both theoretical and managerial insights to researchers and practitioners.
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