Doing good or choosing well? Corporate reputation, CEO reputation, and corporate financial performance

Abstract

Using data from Taiwan’s top 150 listed companies over the period 2003 to 2014, our study explores the influence of CEO reputation and corporate reputation on the financial performance of companies. The analysis focuses especially on the interaction between CEO reputation and corporate reputation to identify which dimension of reputation is more relevant to firm performance. We show that, though both corporate reputation and CEO reputation have an individual impact that benefits the financial performance of the company, the impact of CEO reputation is more persistent across different time periods and more comprehensive across different industries. Furthermore, we find that CEO reputation still has a positive impact on firm performance when corporate reputation is poor, indicating that CEO reputation is more important to firm performance. To pursue better financial performance, should a company make greater effort to build a good corporate reputation, or merely recruit a CEO with a good reputation? Our suggestion here is simple: “choosing well” is better than “doing good.”