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The purpose of this paper is to examine the contemporaneous relationship between changes in corporate reputations and stock prices.

The Harris Interactive Reputation Quotient^TM is used as a measure of corporate reputation. Stock return and risk measures are evaluated for each Reputation Quotient^TM survey period for the years 1999‐2007.

The results provide evidence that, in the aggregate, firm reputations are procyclical. Additionally, firms with improved reputations enjoy lower volatility in their stock prices than firms with diminished reputations.

Due to the Harris Poll Online methodology, it is not clear that the price changes occur concurrently with the change in reputation.

This paper contributes to the finance literature by examining the effect of a change in corporate reputation on stock price.

Scholarship on reputation in and of organizations has been going on for decades, and it always has separated along level of analysis issues, whereby the separate literatures on individual, group/team/unit, and organization reputation fail to acknowledge each other. This sends the implicit message that reputation is a fundamentally different phenomenon at the three different levels of analysis. We tested the validity of this implicit assumption by conducting a multilevel review of the reputation literature, and drawing conclusions about the “level-specific” or “level-generic” nature of the reputation construct. The review results permitted the conclusion that reputation phenomena are essentially the same at all levels of analysis. Based on this, we frame a future agenda for theory and research on reputation.

I use a controlled experiment to examine, in the context of Corporate Social Responsibility (CSR) crises, whether investors' investment judgments are influenced by a firm's CSR reputation and CSR crisis response strategy. I find that for good CSR reputation firms, the use of a rebuild or deny crisis response strategy does not lead to improvements in investment judgments. However, for bad CSR reputation firms, the use of a deny response strategy leads to improvements in investment judgments while the use of a rebuild strategy does not.

The purpose of the study is to examine the impact of corporate reputation (hereafter CR) and the degree of economic development on firms’ cost of capital remains unresolved. This study addresses these issues.

Using a global sample across 20 countries, the study investigates the discrete and joint effects of CR and jurisdictional economic development on the cost of equity (COE) and cost of debt (COD) capital. The analysis encompasses a dual data set, comprising 1,308 observations for COE and 1,223 observations for COD, allowing for a comprehensive exploration of these dynamics.

The findings indicate that CR leads to a reduction in the cost of capital for reputable firms. Nevertheless, the extent of this decrease varies per type of capital and firm’s reputation level and is contingent upon the economic development level within the firm’s jurisdiction. Particularly noteworthy is the moderating effect of economic development on CR, which shows that COE capital tends to be lower for reputable firms operating in economically developed jurisdictions. Albeit, this is not the case for COD capital for reputable firms in similarly developed jurisdictions.

This study illustrates that effective CR management, aimed at reducing the cost of capital, necessitates a combination of the firm’s unique competitive advantage and the economic development context of its jurisdiction to truly achieve its intended goal.

To the best of the authors’ knowledge, this is the first global study to explore the impact of CR on both COE and COD capital. Furthermore, this study is primarily towards understanding the moderating role of economic development in the relationship between CR and cost of capital.

In this chapter, we explore the multilevel nature of reputation from a shared value perspective. Building on a large body of literature surrounding corporate reputation, we discuss how the creation of reputational value at the firm level may also lead to value shared by the industries and countries in which a firm operates, and vice versa. In examining the recursive and dynamic relationships, strategic implications emerge with regard to managing reputations globally. We argue that the value of reputation is determined by the ability to meet the expectations of stakeholders with respect to what they as an audience perceive as important. Stakeholders’ expectations and perceptions of what is valuable fluctuate across different markets and the more heterogeneous the markets in which a firm diversifies internationally, the more difficult it will be to manage all these expectations. By building on our understanding of firm, industry, and country reputation, and the recursive relationships between them, we contend that creating shared value (CSV), as part of the global reputation management process (GRM), is likely to be easier when there is contextual similarity and limited product diversification. Building on previous frameworks, and employing signaling theory, we create a simplified model of GRM that highlights CSV in the form of multilevel reputation. Distinctions are drawn between being efficient and effective as part of the GRM process and a corresponding typology is created. The chapter concludes with a discussion of strategic implications, alongside a few recommendations, and possible directions for future research.

This study examines how firm product reputation functions as an internal and external expectations-setting mechanism shaping firm and external stakeholder behavior.

Longitudinal analysis of 17,879 recalls from 15 automobile manufacturers operating in the United States between 1967 and 2016.

Applying the behavioral theory of the firm (BTF) and signaling theory, this study’s findings suggest that product safety reputation creates variability in the likelihood of both voluntary and government-ordered recalls.

Performance expectations set by past product performance influence managerial decision-making such that products with a higher reputation for quality are more likely to be voluntarily recalled than are their less reputable counterparts. Similarly, regulators are more likely to order the recall of higher reputation products, suggesting that past product performance also influences enforcement behavior. Finally, the scope and severity of product defects are shown to interact with product reputation to influence the likelihood of government-ordered recall.

Firms and firm stakeholders make distinct decisions based on performance variations within firm product portfolios.

Overall firm reputation is important, but there are distinct dynamics that result in product performance variability within firm product portfolios that have important implications on issues such as product safety recalls.

This study's findings reveal that as an internal signal, managers' expectations of product performance can change their behavior following product safety defects. Specifically, voluntary product recalls are more likely for higher-reputation products than those with lower reputations for product safety. This suggests that firm behavior regarding product safety recalls is not consistent within their own product lines. Externally, this study’s findings suggest that product reputation also influences relationships with key stakeholders. Product reputation for quality was shown to be associated with an increased likelihood of government sanctions. Regulators will also be more likely to initiate punitive sanctions against higher-reputation products as the severity and scope of safety defects increase. Under such circumstances, higher-reputation products are more likely to face government sanctions than lower-reputation products. Hence, government regulatory behavior is subject to influence from performance signals such as product reputation.

This study aims to examine the implications of short-term and long-term reputation change because of government agency responses to firm product defects.

This study’s findings have important implications for both scholars and practitioners. From a scholarly perspective, the authors create a more fine-grained examination of reputation that may be used to assess various performance dimensions. From a practice perspective, managers must realize that reputation can be one of an organization’s most important resources as it meets each of the valuable, rare, inimitable and nonsubstitutable criteria associated with those resources capable of providing sustainable competitive advantage.

Analysis of 17,879 product recalls from 15 automobile manufacturers in the US suggests that firms with higher long-term reputations are more likely to face regulator sanctions when a reputation-damaging event happens. On the other hand, firms with higher short-term reputations are less likely to face sanctions in such circumstances. Finally, firms whose short-term reputation exceeds their long-term reputation are less likely to be sanctioned by regulators when reputation-damaging events occur.

There are several limitations that should be addressed. First, as our reputation measure is based on government investigations of potential defects, vehicles that have never been inspected are not included in the sample. Although this number is likely extremely low, omitting vehicles that have never been inspected leaves out some high-reputation firms from the sample. In addition, the study relies on a single-firm stakeholder that is capable of punitive actions.

From a practical perspective, this study’s findings encourage managers to think about the temporal aspects associated with firm reputation, and to realize that stakeholders may react differently when their expectations are not met depending on an organization’s relative long- and short-term reputations. From a theoretic perspective, the primary contribution of this study is to illustrate how long-term and short-term changes in reputation can provide mixed signals to firm stakeholders regarding future performance.

This study explores the temporal aspects of firm reputation by examining how government sanctions vary depending on firms’ long-term (10 years) and short-term (1 year) reputation. The findings of this study contribute to current reputation research by illustrating the variation in government responses to product defects as a function of short-term and long-term reputation. In doing so, the important role of the timing of firm performance is considered.

The purpose of this research is to understand the relationship between publicity, advertising activity and corporate sales in the context of a company’s existing reputation.

The study brings together four unique industry datasets and uses discriminant analysis and multiple regression methods to examine the relationship between existing corporate reputation, publicity, advertising activity and sales levels for major multi-national companies in the technology products sector.

Positive publicity is most important in distinguishing between firms with higher and lower sales. The effects of negative publicity and advertising are dependent on a firm’s existing reputation. For companies with weaker reputations, positive publicity in tandem with business-to-consumer (B2C) advertising is most highly associated with higher company sales. Conversely, for firms with stronger existing reputations, advertising has a significantly diminished role; positive and even negative publicity are most crucial in distinguishing between companies with high and low sales. Negative publicity can be harmful to these firms though if it is not balanced by more positive publicity. Finally, the topic of news coverage is related to sales. Generally, stories that are positive reporting on business outcomes, leadership and business future and marketing practices are most important in discriminating between firms with stronger vs weaker sales.

For this set of technology product firms, publicity and advertising are relevant for sales. Firms with higher levels of sales have both more positive and negative publicity, but the volume of positive stories is much higher. Attracting negative publicity is common for firms that achieve higher sales, but it is offset by a greater number of positive stories, an aspect that public relations efforts can influence. B2C advertising spending meanwhile matters more for firms with weaker rather than stronger existing corporate reputations. It is most effective for firms with weaker existing reputations to maximize the positive signals in the marketplace as exemplified by positive publicity and B2C advertising efforts.

Little research has examined the relationship between different forms of corporate communications and sales; this study is a rare examination using publicity, advertising spending, existing reputation and sales in a durable goods and services context where there has been a particular dearth of even basic advertising studies. Beyond understanding the relative importance of publicity v. advertising, it also uniquely focuses on the individual topics of news publicity.

Although it has often been studied in finance research, the relationship between dividend yields and stock returns remains an unresolved issue, especially in the Korean stock market. When firms continue to pay non-decreasing dividends for three or five years, they may establish a dividend reputation, which could affect this relationship. The author found firms that pay more dividends, larger firms, older firms, more profitable firms, less leveraged firms, firms with less volatile returns, firms with foreign holdings of more than 5%, and firms with more concentrated ownership build dividend reputations. The author also found that the relationship between dividend yields and future stock returns depends on a firm’s dividend reputation. The evidence shows that when firms with higher yields have dividend reputations, they produce higher future returns, whereas there is no significant relationship between yields and returns for firms with no reputation. These results are inconsistent with the findings of studies that use developed market data. In addition, when larger firms with higher growth potential and firms with less concentrated ownership have dividend reputations, future returns are higher.

The purpose of this paper is to examine the impact of corporate social responsibility (CSR) and firm’s reputation in terms of product and service quality, management performance and attractiveness as well as reputation on overall performance from a developing country’s environment.

The partial lest squares structural equation modeling was used to study the relationship between CSR and firm’s reputation as well as the overall organizational performance using a survey of informants from Ghana.

Using data from firms in Ghana, the study demonstrates that CSR initiative by firms will have a positive relationship with firm’s reputation in terms of product and service quality, management performance and attractiveness as well as overall performance. Furthermore, the study demonstrates that enhanced reputation by firms through social responsibility initiatives will lead to firms’ overall performance from the Ghanaian business environment.

The main limitation of this work is the source of the data originating from only executives from Ghana where managers are sometimes skeptical giving out such information; this might have some influence on the results. In addition, there could be potential endogeneity and unobserved heterogeneity issues. It is therefore recommended that future studies should consider these issues to check as to whether the same results could be achieved. Specifically, results indicate that when organizations invest in CSR initiatives, they are likely to achieve product quality, improved management performance and an attractiveness as well as overall performance.

The research shows how CSR initiatives can enhance firm’s reputation and overall performance of a firm.

The work illustrates and provides some insights and builds on the literature in the area CSR and reputation from a developing country’s environment.