Corporate reputation plays a key role in shaping valuations and shareholder perceptions of companies, says a global study. Consultancy Bestra calculated this area contributes almost $667 billion in shareholder value to firms in the Financial Times Stock Exchange (FTSE) 350, approximately 30% of the group’s market capitalization. Other findings include:
• The top three performers based on Bestra’s methodology include energy giant Royal Dutch Shell, whose reputation delivered 52.1% of its value, beating manufacturer Unilever (52%) and natural gas expert BG Group (49.9%).
• Among the top 10, reputation made up 48% of shareholder value, equivalent to $330 billion.
• Reputation assumed the greatest significance in the oil and gas sector, supplying 51.2% of capitalization, slipping to 30.4% for basic materials, 27% for healthcare and 24.5% for consumer goods.
• Bestra’s report notes that at the height of the recession, long-term value, product quality and financial soundness were essential, while CSR was viewed negatively. Now, quality of management, quality of goods and services and “environmental and community responsibility,” likely brought on by BP’s problems, are recognized as key reputation drivers.