Skip to main content
SpringerLink
Log in

Can Corporate Reputation Protect Companies’ Value? Spanish Evidence of the 2007 Financial Crash

  • The Contributors
  • Published:
Corporate Reputation Review Aims and scope Submit manuscript

Abstract

The aim of this paper is two-fold: first, to test empirically whether corporate reputation has a positive effect on the financial performance of companies (named the resource hypothesis), and second, whether it protects companies from a loss of value in a sudden financial crisis (the reservoir hypothesis). A sample of 38 Spanish firms included in the MERCO (the Spanish corporate reputation ranking) and listed in the Spanish stock market has been used. The analysis covers the period from September 2005 to April 2009. A multivariate regression model estimated by ordinary least squares was used to test the research hypotheses in order to monitor other variables that may affect the relationship between reputation and financial performance (measured by the companies’ return and risk). The results show that companies with a strong reputation had better financial performance than those with a poor reputation, before and during the financial crisis after the 2007 crash.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Subscribe and save

Springer+ Basic
$34.99 /Month
  • Get 10 units per month
  • Download Article/Chapter or eBook
  • 1 Unit = 1 Article or 1 Chapter
  • Cancel anytime
Subscribe now

Buy Now

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Figure 1
Figure 2

Similar content being viewed by others

References

  • Barney, J.B. (1991) ‘Firm resources and sustainable competitive advantage’, Journal of Management, 17 (1), 99–120.

    Article  Google Scholar 

  • Black, E.L., Carnes, T.A. and Richardson, V.J. (2000) ‘The market valuation of corporate reputation’, Corporate Reputation Review, 3 (1), 31–42.

    Article  Google Scholar 

  • Brown, B. (1997) ‘Stock market valuation of reputation for corporate social performance’, Corporate Reputation Review, 1 (1), 76–80.

    Article  Google Scholar 

  • Brown, B. (1998) ‘Do stock market investors reward companies with reputations for social performance?’ Corporate Reputation Review, 1 (3), 271–280.

    Article  Google Scholar 

  • De la Fuente Sabate, J.M. and De Quevedo Puente, E. (2003) ‘Empirical analysis of the relationship between corporate reputation and financial performance: A survey of the literature’, Corporate Reputation Review, 6 (2), 161–177.

    Article  Google Scholar 

  • Deephouse, D.L. (1997) ‘The effect of financial and media reputations on performance’, Corporate Reputation Review, 1 (1), 68–72.

    Article  Google Scholar 

  • Dowling, G.R. (1993) ‘Developing your corporate image into a corporate asset’, Journal of Long Range Planning, 26 (2), 101–109.

    Article  Google Scholar 

  • Dowling, G.R. (2006) ‘How good corporate reputations create corporate value’, Corporate Reputation Review, 9 (2), 134–143.

    Article  Google Scholar 

  • Eberl, M. and Schwaiger, M. (2005) ‘Corporate reputation: Disentangling the effects on financial performance’, European Journal of Marketing, 39 (7/8), 838–854.

    Article  Google Scholar 

  • Fernández Sánchez, J.L. and Luna Sotorrío, L. (2007) ‘The creation of value through corporate reputation’, Journal of Business Ethics, 76 (3), 335–346.

    Article  Google Scholar 

  • Fombrun, C. (1996) Reputation: Realizing Value from the Corporate Image, Harvard Business School Press, Boston, MA.

    Google Scholar 

  • Fombrun, C. and Shanley, M. (1990) ‘What's in a name? Reputation building and corporate strategy’, Academy of Management Journal, 33 (1), 233–258.

    Article  Google Scholar 

  • García Rodríguez, F.J. (2004) ‘La reputación empresarial a partir de la perspectiva basada en los recursos y capacidades: Una revisión teórica de su potencialidad competitiva’, Investigaciones Europeas de Dirección y Economía de la Empresa, 10 (2), 1135–2523.

    Google Scholar 

  • Godfrey, P.C., Merill, C.B. and Hansen, J.M. (2009) ‘The relationship between corporate social responsibility and shareholder value: An empirical test of the risk management hypothesis’, Strategic Management Journal, 30 (4), 425–445.

    Article  Google Scholar 

  • Grant, R.M. (1991) ‘The resource-based theory of competitive advantage: Implications for strategy formulation’, California Management Review, 33 (3), 114–135.

    Article  Google Scholar 

  • Gregory, J. (1998) ‘Does corporate reputation provide a cushion to companies facing market volatility? Some supporting evidence’, Corporate Reputation Review, 1 (3), 288–290.

    Article  Google Scholar 

  • Hall, R. (1992) ‘The strategic analysis of intangible resources’, Strategic Management Journal, 13 (2), 135–144.

    Article  Google Scholar 

  • Hall, R. (1993) ‘A framework linking intangible resources and capabilities to sustainable competitive advantage’, Strategic Management Journal, 14 (8), 607–618.

    Article  Google Scholar 

  • Jones, G.H., Jones, B.H. and Little, P. (2000) ‘Reputation as reservoir: Buffering against loss in times of economic crisis’, Corporate Reputation Review, 3 (1), 21–29.

    Article  Google Scholar 

  • Knight, R. and Pretty, D. (1999) ‘Corporate catastrophes, stock returns, and trading volume’, Corporate Reputation Review, 2 (4), 363–378.

    Article  Google Scholar 

  • Kotha, S., Rajgopal, S. and Rindova, V. (2001) ‘Reputation building and performance: An empirical analysis of the top-50 pure internet firms’, European Management Journal, 19 (6), 571–586.

    Article  Google Scholar 

  • Lange, D., Lee, P.M. and Dai, Y. (2011) ‘Organizational reputation: A review’, Journal of Management, 37 (1), 153–184.

    Article  Google Scholar 

  • Mahon, J.F. (2002) ‘Corporate reputation: A research agenda using strategy and stakeholder literature’, Business and Society, 41 (4), 415–445.

    Article  Google Scholar 

  • McMillan, G.S. and Joshi, M.P. (1997) ‘Sustainable competitive advantage and firm performance: The role of intangible resources’, Corporate Reputation Review, 1 (1), 81–85.

    Article  Google Scholar 

  • Patterson, B. (1993) ‘Crisis impact on reputation management?’ Public Relations Journal, 49 (11), 46–47.

    Google Scholar 

  • Pfarrer, M.D., Pollock, T.G. and Rindova, V.P. (2010) ‘A tale of two assets: The effects of firm reputation and celebrity on earnings surprises and investors reactions’, Academy of Management Journal, 53 (5), 1131–1152.

    Article  Google Scholar 

  • Rhee, M. and Haunschild, P.R. (2006) ‘The liability of good reputation: A study of product recalls in the US automobile industry’, Organization Science, 17 (1), 101–117.

    Article  Google Scholar 

  • Roberts, P.W. and Dowling, G.R. (1997) ‘The value of a firm's corporate reputation: How reputation helps attain and sustain superior profitability’, Corporate Reputation Review, 1 (1), 72–76.

    Article  Google Scholar 

  • Roberts, P.W. and Dowling, G.R. (2002) ‘Corporate reputation and sustained superior financial performance’, Strategic Management Journal, 23 (12), 1077–1093.

    Article  Google Scholar 

  • Rose, C. and Thomsen, S. (2004) ‘The impact of corporate reputation on performance: Some Danish evidence’, European Management Journal, 22 (2), 201–210.

    Article  Google Scholar 

  • Russo, M.V. and Fouts, P.A. (1997) ‘A resource-based perspective on corporate environmental performance and profitability’, Academy of Management Journal, 40 (3), 534–559.

    Article  Google Scholar 

  • Schnietz, K.E. and Epstein, M.J. (2005) ‘Exploring the financial value of a reputation for corporate social responsibility during a crisis’, Corporate Reputation Review, 7 (4), 327–345.

    Article  Google Scholar 

  • Srivastava, R.K., Fahey, L. and Christensen, H.K. (2001) ‘The resource-based view and marketing: The role of market-based assets in gaining competitive advantage’, Journal of Management, 27 (6), 777–802.

    Article  Google Scholar 

  • Srivastava, R.K., McInish, T.H., Wood, R.A. and Capraro, A.J. (1997) ‘The value of corporate reputation: Evidence from the equity markets’, Corporate Reputation Review, 1 (1), 62–68.

    Article  Google Scholar 

  • Vergin, R.C. and Qoronfleh, M.W. (1998) ‘Corporate reputation and the stock market’, Business Horizons, 41 (1), 19–26.

    Article  Google Scholar 

  • Weigelt, K. and Camerer, C. (1988) ‘Reputation and corporate strategy: A review of recent theory and applications’, Strategic Management Journal, 9 (5), 443–454.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Business Administration, Faculty of Economics and Business Administration, University of Cantabria, Santander, Spain

    José L Fernández Sánchez

  2. Department of Business Administration, Faculty of Economics and Business Administration, University of Cantabria, Santander, Spain

    Ladislao Luna Sotorrío

  3. Department of Business Administration, Faculty of Economics and Business Administration, University of Cantabria, Santander, Spain

    Elisa Baraibar Díez

Authors
  1. José L Fernández Sánchez
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Ladislao Luna Sotorrío
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Elisa Baraibar Díez
    View author publications

    You can also search for this author in PubMed Google Scholar

Rights and permissions

Reprints and permissions

About this article

Cite this article

Fernández Sánchez, J., Luna Sotorrío, L. & Baraibar Díez, E. Can Corporate Reputation Protect Companies’ Value? Spanish Evidence of the 2007 Financial Crash. Corp Reputation Rev 15, 228–239 (2012). https://doi.org/10.1057/crr.2012.13

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1057/crr.2012.13

Keywords

Search

Navigation