Can brand co-branding trigger stock price volatility? The insider effect of executive trading behavior

Brand co-branding has emerged as a key strategy for enterprises seeking to expand market reach and enhance competitiveness, becoming a prominent feature of modern business practice. However, its actual impact on firm value remains insufficiently validated. This paper investigates the effects of brand co-branding events on stock price volatility and the underlying mechanisms, using Chinese A-share listed companies from 2015 to 2023 as the study sample. Employing difference-in-differences and triple-difference models, the analysis reveals that brand co-branding events generally trigger significant positive stock price reactions. Mechanism tests show that these events influence stock prices through two main channels: first, they increase institutional investors' attention, leading to higher institutional ownership; second, they prompt analysts to raise earnings forecasts, thereby transmitting positive market signals. Further analysis demonstrates that executive trading behavior significantly moderates the effect of co-branding where executive stock purchases prior to co-branding events serve as strong positive signals that amplify market reactions, while executive sales tend to dampen them. Cross-sectional analysis identifies distinct differences across co-branding types, with product co-branding generating significantly stronger market responses than marketing collaborations or intellectual property licensing. These findings not only validate the market relevance of brand co-branding but also highlight the critical role of executive trading behavior as an internal information signal, offering new empirical insights for corporate strategy formulation and investor decision-making. • Brand co-branding events significantly boost short-term stock price returns. • Executive stock purchases amplify co-branding's positive market impact. • Pre-event executive trades signal stronger confidence than post-event ones. • Product co-branding yields greater market reactions than other co-branding types. • Analyst upgrades and institutional attention mediate co-branding stock effects.