Abstract
Firm value is composed of two parts. One is tangible asset (e.g. equipments); the other is intangible assets (e.g. brands). Brand extension is used as a marketing strategy and its effect of brand equity is an important issue by prior researchers. The purpose of this study is to evaluate how brand extension creates firm value (financial equity). In this study, we seek to identify how the factors, that influence consumer evaluations of brand extensions, influence funds managers’ predictions of stock price at virtual scenarios of brand extensions. On the other hand, we would like to investigate whether the change of firm value is correspondent to the valence of consumers’ evaluation of brand extension.