Firm reputation and investment decisions: The contingency role of securities analysts' recommendations

Fasaei, Hesam; Tempelaar, Michiel Pieter; Jansen, Justin J. P.

doi:10.1016/j.lrp.2017.07.010

Cited by 29 publications

(32 citation statements)

References 84 publications

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“…Our results demonstrate that environmentally based strategic behaviour has an impact on the financial side of corporate reputation. Therefore, our findings suggest that adopting an EP improvement strategy consistent with the substantive nature of a firm’s business activity may not only enhance the firm’s corporate reputation for non-financial stakeholders (Brammer and Pavelin, 2006; Tetrault-Sirsly and Lvina, 2016) but also contribute to rebuilding the trust of financial stakeholders, whose behaviour is significantly influenced by analysts’ coverage and recommendations (Gabbioneta et al , 2007; Fasaei et al , 2018).…”

Section: Discussionmentioning

confidence: 87%

“…Finally, some recent research has addressed the relevance of the “prevention-focus mechanism” behind the reputation construct (Fasaei et al , 2018), suggesting that firms with high reputation might pay attention to reputational stability and attempt to maintain the status quo, which is not an issue for firms experiencing low reputation. Moreover, rebuilding reputation from a low level is more difficult than enhancing an already high reputation (Tetrault-Sirsly and Lvina, 2016).…”

Section: Implications and Conclusionmentioning

confidence: 99%

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Financial reputation repair through environmental performance

Matozza

Biscotti

Mafrolla

2019

SAMPJ

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Purpose This paper aims to examine whether firms in polluting industries improve their environmental performance to effectively repair their financial reputation in the aftermath of an accounting restatement – a financial reputation-damaging event. Design/methodology/approach The authors test their hypotheses using multiple regression analysis of a sample of firms listed in International Financial Reporting Standards (IFRS)-adopting countries. They use a comparative empirical design in which a sample of firms that underwent a restatement (henceforth, restating firms) are compared with control groups of pair- and multiple-matched firms that did not undergo restatements (non-restating firms). Findings The study finds that restating firms have higher environmental performance in the aftermath of restatement events. Additionally, the authors demonstrate that this environmentally based reputation repair positively influences the financial reputation of the firms, as measured by analyst coverage and recommendations and which previously decreased because of the restatement event. Practical implications Because environmental levers are a substantial contextual factor in polluting industries, shifting the stakeholder debate to firms’ environmental commitment can improve financial stakeholders’ opinions and favour the repair of the multifaceted reputation of the financially damaged firm. Social implications With a worldwide growing attention to environment there is a critical need for understanding how polluting firms integrate sustainability and financial reputation. We demostrate that polluting firms recover from a financial failure pursuing their environmental performance. Originality/value Contributing to the behavioural theory of reputation repair and in line with the legitimacy perspective in environmental disclosure research, this paper shows that polluting firms recover from a loss to their financial reputation by diverting stakeholders’ attention towards the environmental field, thus restoring their financial reputation, as financial analysts value environmental performance improvement – a substantial contextual factor of polluting firms’ reputation repair process.

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Section: Discussionmentioning

confidence: 87%

Section: Implications and Conclusionmentioning

confidence: 99%

Financial reputation repair through environmental performance

Matozza

Biscotti

Mafrolla

2019

SAMPJ

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“…Harris , 1988;Fombrun, 1996;Shenkar,1997;Riepina, 2012;Kovtun, 2012 6 Integrated Business reputation of an enterprise is its main intangible asset that has significant cost and is formed at the expense of such enterprise's assets as reputation, brand image, and financial stability of the enterprise. Lange, 2010;Lee, 2010;Dai, 2010;Fasaei, 2018;Tempelaar, 2018;Jansen, 2018 * Source: systemized by Authors.…”

Section: Resultsmentioning

confidence: 99%

“…Customers choose products supplied by enterprises with a positive reputation, and they are ready to buy these goods at higher prices (Fombrun & Shanley, 1990). In addition, enterprises with high reputation get more potential vacancies (Fombrun & Shanley, 1990), they may find a wider circle of communication connections (Schwaiger, 2004;Fasaei et al, 2018) and financial resources (Chun, 2005;MacMillan et al, 2005). Studies show that the reputation of an enterprise is directly proportional to its success (Lange, Lee & Dai, 2010;Roberts & Dowling, 2002).…”

Section: Introductionmentioning

confidence: 99%

Identification of the theoretical aspects of enterprise reputation

Рєпіна

Kovtun

2018

EJMI

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Purpose – to identify the theoretical aspects of enterprise reputation. Design/Method/Research approach. Authors applied a structural-functional method in the course of systemic investigation and substantiation of the methodological toolset of enterprise reputation assessment and the method of logical generalization when analyzing the evolution of scientific views on the nature of the notion "reputation". The information base of this research is the monographic works and scientific publications on relevant subjects. Findings. Authors have substantiated the theoretical aspects of enterprise reputation, according to which the reputation of an enterprise is formed under the influence of both intangible and tangible factors. Approaches to defining reputation of an enterprise were systemized, with their new classification proposed, which distinguishes the immanent-functional, value, emotional (image), monitoring, market, and integrated approaches. Current methodological toolset of enterprise reputation assessment has been analyzed, and the scope of its application has been determined, as well as the main advantages and disadvantages. An algorithm for evaluating an enterprise reputation has been developed, in accordance with the proposed theoretical approach, a market share, and the totality of consumers values. Practical implications. Results of this study could form the basis for forming a policy of an enterprise concerning the activation of reputation management processes with the purpose of strategic development of the enterprise and in order to faster meet the expectations of its stakeholders, which would provide a synergistic effect. Originality/Value.Authors proposed to define the essence of the notion of an enterprise "reputation", which, in contrast to existing interpretations, focuses on the cognitive-contemplative characteristic of an enterprise, which is formed based on the results of comparing the totality of tangible, intangible, personal, and social values, inherent to its external and internal stakeholders; changing them in time and space indirectly affects positioning of the enterprise in the market as a result of change in the way its stakeholders perceive it. Research limitations/Future research. Results of this study should be laid at the basis of the implementation of the proposed algorithm for assessing reputation in the process of enterprise management. Paper type ‒ theoretical.

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“…Nevertheless, if the institution has consistently given a higher market expectation rating for the listed companies, this could cause investors to make a judgment that is collusion between institutional analysts and enterprise managers. At this time, investors will run counter to the market expectation rating and invest in opposite directions, which leads to enterprise managers having to reduce the risk investment to improve the current performance to attract investors [28].…”

Section: Market Expectation Rating and Enterprise Innovation Inputmentioning

confidence: 99%

Can the Gap and Rating of Market Expectation Promote Innovation Input of China Manufacturers?

Jiang

2020

Sustainability

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Under the strategic background of Made-in-China to Mind-in-China, how the capital market expectation affects enterprise innovation input has reached no coincident conclusion. This paper uses Chinese A-share manufacturing listed companies from 2010 to 2017 to investigate the internal mechanism among the gap and rating of market expectation and enterprise innovation input, and further explores the moderating effects of institutional coverage and government subsidies. The results show that: firstly, innovation input will first decrease and then increase with the market expectation gap increase. However, innovation input will first increase and then decrease with the market expectation rating increase. Secondly, when the institutional coverage and government subsidies increase, innovation input will remarkably transform from the first decrease and then increase into the first increase, then decrease with the market expectation gap increase. Finally, when institutional coverage is high and government subsidies are low, innovation input will remarkably transform from the first increase and then decrease into the first decrease, and then increase with the market expectation rating increases. These research findings can provide some academic support and policy references for managers to deal with effectively external performance pressures, institutional coverage, and optimize government subsidies to promote manufacturers’ innovation-driven upgrading.

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Firm reputation and investment decisions: The contingency role of securities analysts' recommendations

Cited by 29 publications

References 84 publications

Financial reputation repair through environmental performance

Financial reputation repair through environmental performance

Identification of the theoretical aspects of enterprise reputation

Can the Gap and Rating of Market Expectation Promote Innovation Input of China Manufacturers?

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