Corporate reputation and firms' performance: Evidence from Spain

Mariano Gonzalez Sanchez and María Encina Morales de Vega

Corporate Social Responsibility and Environmental Management, 2018, vol. 25, issue 6, 1231-1245

Abstract: Reputational risk is negatively perceived by stakeholders and economic agents, and can cause negative future effects on sustainability, corporate image and stakeholder engagement. This study analyzes and selects bad news regarding a sample of Spanish listed companies and uses it to explain abnormal returns and liquidity risk, to better understand how decisions should be taken in the future in a more innovative and sustainable way. The results indicate that there are negative reputational effects on excess returns and trading volume variations, and positive effects on volatility. Additionally, an increase in illiquidity is implied. The inclusion of bad reputational news in the model improves its goodness of fit by between 1.25% and 3%.

Date: 2018
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https://doi.org/10.1002/csr.1634

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Persistent link: https://EconPapers.repec.org/RePEc:wly:corsem:v:25:y:2018:i:6:p:1231-1245

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