If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. AbstractPurpose -The purpose of this paper is to examine the contemporaneous relationship between changes in corporate reputations and stock prices. Design/methodology/approach -The Harris Interactive Reputation Quotient TM is used as a measure of corporate reputation. Stock return and risk measures are evaluated for each Reputation Quotient TM survey period for the years 1999-2007. Findings -The results provide evidence that, in the aggregate, firm reputations are procyclical. Additionally, firms with improved reputations enjoy lower volatility in their stock prices than firms with diminished reputations. Research limitations/implications -Due to the Harris Poll Online methodology, it is not clear that the price changes occur concurrently with the change in reputation. Originality/value -This paper contributes to the finance literature by examining the effect of a change in corporate reputation on stock price.

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This study of firm reputations finds that firms with improved reputations, as measured by Harris Interactive, provide higher average rates of return on the announcement date than those firms with diminished reputations. Somewhat surprisingly, firms with improved reputations earned an 8.3% return over the following year whereas firms with diminished returns earned a higher 15.4 % return. One can only speculate that firms with diminished reputations might be making management decisions that enhanced profitability at the expense of positive public perceptions of the firm. Sharpe and Treynor measures, based on median returns, were significantly greater for those firms with above average changes in reputation.

During the decade beginning on December 31, 1999, an equal-weighted portfolio of the Dow Jones Industrial Average (DJIA) stocks outperformed the market capitalization and priceweighted portfolios, with ending values of $1,020, $731, and $777 on the $1,000 originally invested, respectively. The net income and free cash flows-weighted portfolios performed the best with identical ending values of $1,082. The portfolio with the lowest standard deviation measure of total risk was weighted on net income (14.26%) and the portfolio with the highest total risk was weighted on total assets (27.78%). All portfolios had their worst performance in 2008, while the best performance varied across portfolios but were limited to the years 2003, 2006 and 2009.