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Purpose This study integrates market-based assets (MBA) and Behavioral Finance to examine how market volatility impacts firm financial performance and how two key intangible assets—brand equity (BE) and ESG risk exposure (ESGRX)—moderate this relationship. While prior research has examined the effects of volatility, this study explains how reputational signals like BE and ESGRX shape firm performance under volatile market conditions. Design/methodology/approach We analyze panel data from 84 S&P 500 firms over 24 months (pre- and post-COVID-19). Using fixed-effects regression models and Fama–French six-factor controls together with firm and macro level controls, we assess how BE and ESGRX influence abnormal returns, idiosyncratic risk and systematic risk under volatility. Findings Volatility reduces abnormal returns and increases idiosyncratic risk. BE mitigates these effects, while ESGRX amplifies them. Neither BE nor ESGRX significantly impacts systematic risk, indicating that BE shields against firm-specific shocks but not market-wide ones. A significant three-way interaction shows that under high volatility and ESGRX, BE reduces idiosyncratic risk, but has no effect on returns or systematic risk. Originality/value This study introduces ESGRX as a risk-oriented intangible asset and BE as a reputational buffer under market stress. By integrating MBA with Behavioral Finance, this research shows how these intangible assets shape firm performance during volatility. Practically, it guides leaders on leveraging these assets for resilience and investor confidence in uncertain markets.
Ash Zaad (Tue,) studied this question.