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

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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.

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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
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  2. Ladislao Luna Sotorrío
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  3. Elisa Baraibar Díez
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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

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