IDEAS home Printed from https://ideas.repec.org/p/rdg/icmadp/icma-dp2006-05.html
   My bibliography  Save this paper

Corporate Reputation and Stock Returns; are good firm good for investors?

Author

Listed:
  • Stephen Brammer

    (University of Bath)

  • Chris Brooks

    (ICMA Centre, University of Reading)

  • Stephen Pavelin

    (Economics - Business School - University of Reading)

Abstract

This paper employs a unique dataset from the UK based on ten years of surveys of company directors and analysts conducted for Management Today to examine the relationship between a firm's reputation and the returns on its shares. We find that investors who purchase stocks with reputation scores that have risen significantly can make abnormal returns. Also, firms whose scores have fallen substantially still exhibit positive abnormal returns in both the short and long run when the market index is employed as a benchmark. However, when a more appropriate comparator is used, evidence of out-performance entirely disappears

Suggested Citation

  • Stephen Brammer & Chris Brooks & Stephen Pavelin, 2006. "Corporate Reputation and Stock Returns; are good firm good for investors?," ICMA Centre Discussion Papers in Finance icma-dp2006-05, Henley Business School, University of Reading.
    • Handle: RePEc:rdg:icmadp:icma-dp2006-05
    as

    Download full text from publisher

    File URL: http://www.icmacentre.ac.uk/pdf/discussion/DP2006-05.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Womack, Kent L, 1996. "Do Brokerage Analysts' Recommendations Have Investment Value?," Journal of Finance, American Finance Association, vol. 51(1), pages 137-167, March.
    2. Chemmanur, Thomas J. & Paeglis, Imants, 2005. "Management quality, certification, and initial public offerings," Journal of Financial Economics, Elsevier, vol. 76(2), pages 331-368, May.
    3. De Bondt, Werner F M & Thaler, Richard, 1985. "Does the Stock Market Overreact?," Journal of Finance, American Finance Association, vol. 40(3), pages 793-805, July.
    4. repec:bla:jfinan:v:53:y:1998:i:1:p:285-311 is not listed on IDEAS
    5. Greg Filbeck & Dianna Preece, 2003. ""Fortune's" Best 100 Companies to Work for in America: Do They Work for Shareholders?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 30(5-6), pages 771-797.
    6. Chen, Hsiu-Lang & De Bondt, Werner, 2004. "Style momentum within the S&P-500 index," Journal of Empirical Finance, Elsevier, vol. 11(4), pages 483-507, September.
    7. Carhart, Mark M, 1997. "On Persistence in Mutual Fund Performance," Journal of Finance, American Finance Association, vol. 52(1), pages 57-82, March.
    8. Stephen J. Brammer & Stephen Pavelin, 2006. "Corporate Reputation and Social Performance: The Importance of Fit," Journal of Management Studies, Wiley Blackwell, vol. 43(3), pages 435-455, May.
    9. Greg Filbeck & Dianna Preece, 2003. "Fortune’s Best 100 Companies to Work for in America: Do They Work for Shareholders?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 30(5‐6), pages 771-797, June.
    10. Asquith, Paul & Mikhail, Michael B. & Au, Andrea S., 2005. "Information content of equity analyst reports," Journal of Financial Economics, Elsevier, vol. 75(2), pages 245-282, February.
    11. Brad Barber & Reuven Lehavy & Maureen McNichols & Brett Trueman, 2001. "Can Investors Profit from the Prophets? Security Analyst Recommendations and Stock Returns," Journal of Finance, American Finance Association, vol. 56(2), pages 531-563, April.
    Full references (including those not matched with items on IDEAS)

    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. Nerissa C. Brown & Kelsey D. Wei & Russ Wermers, 2014. "Analyst Recommendations, Mutual Fund Herding, and Overreaction in Stock Prices," Management Science, INFORMS, vol. 60(1), pages 1-20, January.
    2. Savor, Pavel G., 2012. "Stock returns after major price shocks: The impact of information," Journal of Financial Economics, Elsevier, vol. 106(3), pages 635-659.
    3. Brammer, Stephen & Brooks, Chris & Pavelin, Stephen, 2009. "The stock performance of America's 100 Best Corporate Citizens," The Quarterly Review of Economics and Finance, Elsevier, vol. 49(3), pages 1065-1080, August.
    4. Hess, Dieter & Kreutzmann, Daniel & Pucker, Oliver, 2011. "Projected earnings accuracy and the profitability of stock recommendations," CFR Working Papers 10-17 [rev.], University of Cologne, Centre for Financial Research (CFR).
    5. Thabang Mokoaleli-Mokoteli & Richard J. Taffler & Vineet Agarwal, 2009. "Behavioural Bias and Conflicts of Interest in Analyst Stock Recommendations," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 36(3-4), pages 384-418.
    6. Marina Balboa & J. Carlos Gómez‐Sala & Germán López‐Espinosa, 2009. "The Value of Adjusting the Bias in Recommendations: International Evidence," European Financial Management, European Financial Management Association, vol. 15(1), pages 208-230, January.
    7. Szakmary, Andrew C. & Conover, C. Mitchell & Lancaster, Carol, 2008. "An examination of Value Line's long-term projections," Journal of Banking & Finance, Elsevier, vol. 32(5), pages 820-833, May.
    8. Hall, Jason L. & Tacon, Paul B., 2010. "Forecast accuracy and stock recommendations," Journal of Contemporary Accounting and Economics, Elsevier, vol. 6(1), pages 18-33.
    9. repec:cgr:cgsser:03-03 is not listed on IDEAS
    10. Darko B. Vukovic & Orifjon O. U. Kurbonov & Moinak Maiti & Mustafa Özer & Milan Radovanovic, 2024. "Outperforming the market: a comparison of Star and NonStar analysts’ investment strategies and recommendations," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-15, December.
    11. Thabang Mokoaleli‐Mokoteli & Richard J. Taffler & Vineet Agarwal, 2009. "Behavioural Bias and Conflicts of Interest in Analyst Stock Recommendations," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 36(3‐4), pages 384-418, April.
    12. Adria Pop & Jan Sporer & Siegfried Handschuh, 2024. "The Structure of Financial Equity Research Reports -- Identification of the Most Frequently Asked Questions in Financial Analyst Reports to Automate Equity Research Using Llama 3 and GPT-4," Papers 2407.18327, arXiv.org.
    13. Hobbs, Jeffrey & Kovacs, Tunde & Sharma, Vivek, 2012. "The investment value of the frequency of analyst recommendation changes for the ordinary investor," Journal of Empirical Finance, Elsevier, vol. 19(1), pages 94-108.
    14. Florian Esterer & David Schröder, 2014. "Implied cost of capital investment strategies: evidence from international stock markets," Annals of Finance, Springer, vol. 10(2), pages 171-195, May.
    15. Stefan Kanne & Jan Klobucnik & Daniel Kreutzmann & Soenke Sievers, 2012. "To buy or not to buy? The value of contradictory analyst signals," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 26(4), pages 405-428, December.
    16. Gu, Chen & Guo, Xu & Zhang, Chengping, 2022. "Analyst target price revisions and institutional herding," International Review of Financial Analysis, Elsevier, vol. 82(C).
    17. Lauren Cohen & Andrea Frazzini & Christopher J. Malloy, 2012. "Hiring Cheerleaders: Board Appointments of "Independent" Directors," Management Science, INFORMS, vol. 58(6), pages 1039-1058, June.
    18. Vesa Pursiainen, 2022. "Cultural Biases in Equity Analysis," Journal of Finance, American Finance Association, vol. 77(1), pages 163-211, February.
    19. Guillermo Badía & Luis Ferruz & Maria Céu Cortez, 2021. "The performance of social responsible investing from retail investors' perspective: international evidence," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 6074-6088, October.
    20. Adam Zaremba & Jacob Koby Shemer, 2018. "Price-Based Investment Strategies," Springer Books, Springer, number 978-3-319-91530-2, March.
    21. Chen Su, 2023. "The price impact of analyst revisions and the state of the economy: Evidence around the world," The Financial Review, Eastern Finance Association, vol. 58(4), pages 887-930, November.

    More about this item

    Keywords

    Management today; most admired firms; stock returns;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • M20 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - General

    Statistics

    Access and download statistics

    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:rdg:icmadp:icma-dp2006-05. 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: Marie Pearson (email available below). General contact details of provider: https://edirc.repec.org/data/bsrdguk.html .

    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.