IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v14y2022i20p13567-d948235.html
   My bibliography  Save this article

Financial Performance and Sustainable Corporate Reputation: Empirical Evidence from the Airline Business

Author

Listed:
  • Larissa M. Batrancea

    (Department of Business, Babeş-Bolyai University, 7 Horea Street, 400174 Cluj-Napoca, Romania)

  • Anca Nichita

    (Faculty of Economics, “1 Decembrie 1918” University of Alba Iulia, 15−17 Unirii Street, 510009 Alba Iulia, Romania)

  • Andreas-Daniel Cocis

    (Department of Economics and Business Administration, Babeş-Bolyai University, 58−60 Teodor Mihali Street, 400591 Cluj-Napoca, Romania)

Abstract

A good corporate reputation is essential, and it is becoming increasingly relevant for both companies and stakeholders. In this context, Fortune magazine publishes an annual ranking of corporate reputation, therefore listing the most admired companies in the world. Since corporate reputation is considered an intangible asset, it is difficult for competing firms to create similar products or services in the long run. Numerous researchers have concluded that financial performance is strongly connected to corporate reputation. The purpose of this study was to elicit the importance of financial performance in determining an adequate sustainable level of corporate reputation. Using financial indicators and the VIKOR method for a sample of airline companies, we compared the rankings generated by the VIKOR method to the ones published by Fortune . Empirical results showed that when introducing additional financial indicators in the VIKOR method, the VIKOR ranking tends to become similar to the Fortune one. When we introduced 10 financial indicators in the VIKOR method, we obtained similar rankings in 8 of the 10 years of analysis. Our study addresses stakeholders who follow corporate reputation details and may assist them in formulating investment decisions by relying on financial results.

Suggested Citation

  • Larissa M. Batrancea & Anca Nichita & Andreas-Daniel Cocis, 2022. "Financial Performance and Sustainable Corporate Reputation: Empirical Evidence from the Airline Business," Sustainability, MDPI, vol. 14(20), pages 1-15, October.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:20:p:13567-:d:948235
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/14/20/13567/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/14/20/13567/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Michael C. Jensen, 2010. "Value Maximization, Stakeholder Theory, and the Corporate Objective Function," Journal of Applied Corporate Finance, Morgan Stanley, vol. 22(1), pages 32-42, January.
    2. Tomasz L. Nawrocki & Danuta Szwajca, 2022. "The Importance of Selected Aspects of a Company’s Reputation for Individual Stock Market Investors—Evidence from Polish Capital Market," Sustainability, MDPI, vol. 14(15), pages 1-15, July.
    3. Andreas-Daniel Cocis & Larissa Batrancea & Horia Tulai, 2021. "The Link between Corporate Reputation and Financial Performance and Equilibrium within the Airline Industry," Mathematics, MDPI, vol. 9(17), pages 1-12, September.
    4. Stephen L. Liedtka, 2002. "The Information Content of Nonfinancial Performance Measures in the Airline Industry," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 29(7‐8), pages 1105-1121.
    5. Gatzert, Nadine, 2015. "The impact of corporate reputation and reputation damaging events on financial performance: Empirical evidence from the literature," European Management Journal, Elsevier, vol. 33(6), pages 485-499.
    6. Rita, Paulo & Moro, Sérgio & Cavalcanti, Gabriel, 2022. "The impact of COVID-19 on tourism: Analysis of online reviews in the airlines sector," Journal of Air Transport Management, Elsevier, vol. 104(C).
    7. Maneenop, Sakkakom & Kotcharin, Suntichai, 2020. "The impacts of COVID-19 on the global airline industry: An event study approach," Journal of Air Transport Management, Elsevier, vol. 89(C).
    8. Stephen L. Liedtka, 2002. "The Information Content of Nonfinancial Performance Measures in the Airline Industry," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 29(7&8), pages 1105-1121.
    9. Manfred Schwaiger, 2004. "Components And Parameters Of Corporate Reputation – An Empirical Study," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 56(1), pages 46-71, January.
    10. Lian Fen Lee & Amy P. Hutton & Susan Shu, 2015. "The Role of Social Media in the Capital Market: Evidence from Consumer Product Recalls," Journal of Accounting Research, Wiley Blackwell, vol. 53(2), pages 367-404, May.
    11. Yijing Wang & Guido Berens, 2015. "The Impact of Four Types of Corporate Social Performance on Reputation and Financial Performance," Journal of Business Ethics, Springer, vol. 131(2), pages 337-359, October.
    12. Riley, Richard Jr. & Pearson, Timothy A. & Trompeter, Greg, 2003. "The value relevance of non-financial performance variables and accounting information: the case of the airline industry," Journal of Accounting and Public Policy, Elsevier, vol. 22(3), pages 231-254.
    13. Ali, Raza & Lynch, Richard & Melewar, T.C. & Jin, Zhongqi, 2015. "The moderating influences on the relationship of corporate reputation with its antecedents and consequences: A meta-analytic review," Journal of Business Research, Elsevier, vol. 68(5), pages 1105-1117.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hyoungjin Lee, 2023. "Surviving the Time: CEO Tenure and Its Impact on Risky Foreign Direct Investment in Conflict-Prone Belt and Road Initiative Participant Countries," Sustainability, MDPI, vol. 15(17), pages 1-18, September.
    2. Samuka Mohanty & Rajashree Dash, 2022. "Neural Network-Based Bitcoin Pricing Using a New Mutated Climb Monkey Algorithm with TOPSIS Analysis for Sustainable Development," Mathematics, MDPI, vol. 10(22), pages 1-23, November.
    3. Samuka Mohanty & Rajashree Dash, 2023. "A New Dual Normalization for Enhancing the Bitcoin Pricing Capability of an Optimized Low Complexity Neural Net with TOPSIS Evaluation," Mathematics, MDPI, vol. 11(5), pages 1-28, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Annika Veh & Markus Göbel & Rick Vogel, 2019. "Corporate reputation in management research: a review of the literature and assessment of the concept," Business Research, Springer;German Academic Association for Business Research, vol. 12(2), pages 315-353, December.
    2. Radu-Dan TURCU & Mihaela TURTUREA, 2015. "Study Regarding Companies Performance Measurement Through Non-Financial Indicators – The Case Of Airline Industry," Network Intelligence Studies, Romanian Foundation for Business Intelligence, Editorial Department, issue 6, pages 117-122, December.
    3. Mariano González Sánchez & María Encina Morales de Vega, 2018. "Corporate reputation and firms' performance: Evidence from Spain," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 25(6), pages 1231-1245, November.
    4. Gatzert, Nadine, 2015. "The impact of corporate reputation and reputation damaging events on financial performance: Empirical evidence from the literature," European Management Journal, Elsevier, vol. 33(6), pages 485-499.
    5. Francesco Gangi & Antonio Meles & Eugenio D'Angelo & Lucia Michela Daniele, 2019. "Sustainable development and corporate governance in the financial system: Are environmentally friendly banks less risky?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(3), pages 529-547, May.
    6. Vicente Lima Crisóstomo & Priscila Azevedo Prudêncio & Isac Freitas Brandão, 2023. "Corporate Reputation in Brazil: The Effects of the Shareholding Control Configuration, Corporate Governance, and Corporate Social Responsibility," Corporate Reputation Review, Palgrave Macmillan, vol. 26(4), pages 243-263, November.
    7. Alberto Barroso del Toro & Laura Vivas Crisol & Xavier Tort-Martorell, 2022. "Comparing the Impacts of Sustainability Narratives on American and European Energy Shareholders: A Multi-Event Study Analysing Reactions to News before and during COVID-19," Sustainability, MDPI, vol. 14(23), pages 1-18, November.
    8. Das, Deepjyoti & Sharma, Somesh Kumar & Parti, Raman & Singh, Jagroop, 2016. "Analyzing the effect of aviation infrastructure over aviation fuel consumption reduction," Journal of Air Transport Management, Elsevier, vol. 57(C), pages 89-100.
    9. Gross, Hellen P. & Ingerfurth, Stefan & Willems, Jurgen, 2021. "Employees as reputation advocates: Dimensions of employee job satisfaction explaining employees’ recommendation intention," Journal of Business Research, Elsevier, vol. 134(C), pages 405-413.
    10. James J. Cordeiro & Ambra Galeazzo & Tara Shankar Shaw, 2023. "The CSR–CFP relationship in the presence of institutional voids and the moderating role of family ownership," Asian Business & Management, Palgrave Macmillan, vol. 22(1), pages 137-163, February.
    11. George Serafeim & Aaron Yoon, 2023. "Stock price reactions to ESG news: the role of ESG ratings and disagreement," Review of Accounting Studies, Springer, vol. 28(3), pages 1500-1530, September.
    12. Carlos Ferro-Soto & Luz Amparo Macías-Quintana & Paula Vázquez-Rodríguez, 2018. "Effect of Stakeholders-Oriented Behavior on the Performance of Sustainable Business," Sustainability, MDPI, vol. 10(12), pages 1-27, December.
    13. Joseph F. Brazel & Keith L. Jones & Mark F. Zimbelman, 2009. "Using Nonfinancial Measures to Assess Fraud Risk," Journal of Accounting Research, Wiley Blackwell, vol. 47(5), pages 1135-1166, December.
    14. Shafu Zhang & Like Jiang & Michel Magnan & Lixin Nancy Su, 2021. "Dealing with Ethical Dilemmas: A Look at Financial Reporting by Firms Facing Product Harm Crises," Journal of Business Ethics, Springer, vol. 170(3), pages 497-518, May.
    15. Leon Zolotoy & Don O’Sullivan & Jill Klein, 2019. "Character Cues and Contracting Costs: The Relationship Between Philanthropy and the Cost of Capital," Journal of Business Ethics, Springer, vol. 154(2), pages 497-515, January.
    16. Svenja Damberg & Manfred Schwaiger & Christian M. Ringle, 2022. "What’s important for relationship management? The mediating roles of relational trust and satisfaction for loyalty of cooperative banks’ customers," Journal of Marketing Analytics, Palgrave Macmillan, vol. 10(1), pages 3-18, March.
    17. SangRyeong Lee & Jin-Woo Park & DongRyeol Choi, 2023. "The Effects of ESG Management on Business Performance: The Case of Incheon International Airport," Sustainability, MDPI, vol. 15(24), pages 1-22, December.
    18. James Agarwal & Madelynn Stackhouse & Oleksiy Osiyevskyy, 2018. "I Love That Company: Look How Ethical, Prominent, and Efficacious It Is—A Triadic Organizational Reputation (TOR) Scale," Journal of Business Ethics, Springer, vol. 153(3), pages 889-910, December.
    19. David Berlepsch & Fred Lemke & Matthew Gorton, 2024. "The Importance of Corporate Reputation for Sustainable Supply Chains: A Systematic Literature Review, Bibliometric Mapping, and Research Agenda," Journal of Business Ethics, Springer, vol. 189(1), pages 9-34, January.
    20. Anna Blajer-Gołębiewska, 2021. "Individual corporate reputation and perception of collective corporate reputation regarding stock market investments," PLOS ONE, Public Library of Science, vol. 16(9), pages 1-21, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:14:y:2022:i:20:p:13567-:d:948235. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.