The interdependence of corporate reputation and ownership: a network approach to quantify reputation.

Yan Zhang,Frank Schweitzer

doi:10.1098/rsos.190570

Abstract

We propose a novel way to measure the reputation of firms by using information about their ownership structure. Supported by the signalling theory, we argue that ownership relations channel reputation spillovers between shareholders and their invested companies. We model such reputation spillovers by means of a simple dynamics that runs on the ownership network, constructed from available databases. We focus on the core of the global ownership network with 1300 firms and 12 100 ownership links. Our method assigns an ownership-based reputation value to each firm, used to provide a quantitative reputation ranking. We compare our ranking with alternative rankings, to confirm that the top-ranked firms are correctly identified. We also demonstrate that our reputation measure does not correlate substantially with operating revenue or control and thus provides additional information about firms.

Highlights

The topic of corporate reputation has attracted considerable attention from both academics and practitioners over the last years
We focus on the dimension of reputation related to corporate shareholders, a key stakeholder group of companies, which are connected by ownership relations
We focus on the dimension of reputation that relates to corporate shareholders, a key stakeholder group of companies connected by ownership relations

Summary

Introduction

The topic of corporate reputation has attracted considerable attention from both academics and practitioners over the last years. Our careful review of the literature and the industry practices shows that the current research on 2 quantifying and measuring corporate reputation primarily uses survey data as the basis for reputation [3,4,5]. To extend this empirical basis, we take a different approach by considering data on ownership relations that connect firms. We know of only a few works that focus on corporate shareholders and the corresponding ownership structure [6] with respect to reputation This is at difference to other types of stakeholders that have been adequately addressed, such as the public [7] and opinion leaders [8]

Methods

Results

Conclusion