Accounting for Corporate Reputation

This work examines conceptual, empirical and practical issues associated with corporate reputation. Emphasising the importance of the roles of corporate social disclosure and organisational effectiveness, the authors stress the need for an integrative framework in explaining the nature of corporate reputation. Utilising valuable data provided by Fortune magazine, the book provides both an historical evaluation of reputational rankings of Fortune’s 500 firms for the period 1987-1991 and insights as to the market reaction to disclosure of these rankings. These can be utilised by firms in building reputation, investors in evaluating their strategies, and public policy officials in dealing with corporations. Following an extensive review of the conceptual foundations of corporate reputation, namely corporate social performance and disclosure and organisational effectiveness, the authors present explanatory and predictive models of corporate reputation. They then examine the potential relationship between corporate reputation and shareholders’ wealth - the market reaction to reputation signals. Their findings suggest that a firm’s benefit from the disclosure of reputation signals will depend on size and expectations, and that such disclosure appears to lead to a significant, lagged market reaction. Based on a detailed analysis of the 1987-1991 performance of US firms on eight key attributes of reputation, the authors conclude with insights that should be of use to corporations and investors.