A corporation's reputation can be reflected by certain objective factors, such as the ratings on its bond issues. A rating of Aaa or AAA from Moody's or S&P would reflect favorably on how a corporation is viewed in the marketplace, just a a rating of say Bbb or BBB would not reflect a favorable image.

The reputation of a corporation could also be reflected in the turnover rate of its employees. For example, firms with low turnover would be regarded as being more attractive workplaces.

The stability of a corporation's dividends and market price per share would also be objective indicators of a firm's reputation. Either stable or steadily growing dividends and stable or rising market price would enhance a firm's reputation. Similarly, a small beta would likely reflect well a a firm from a risk perspective.

And, of course, firms with favorable media images would garner a better reputation if that "press" took the form of be an innovator and/or committed to a cleaner environment ("green") and/or committed to workplace diversity and equity,  its reputation would likely be enhanced. Indeed, having one's CEO on the cover of  a major Business publication--for positive recognition--could benefit a firm's image.

From the financial point of view

1. Stable and steady dividends

2. Forward PE multiples should ideally be always lower than Trail multiples

3. PEG should be lower than 1 or at least equal to 1 for sustainable long period of time

4. WACC should be on the lower side, and that point should also be highlighted

5. Beta should be optimum, neither too low nor too high

6. Sound payment record to the vendors, Banks and suppliers will help to increase the Credit Rating as well

Non- financial parameter

1. Serious CSR and if possible some philanthropic work

2. Credibility should be established over a long period with moderate claims and better performance

3. Mode of Business should be Green

I did my thesis on reputational effects in knowledge intensive firms that was published in Service Industries Journal in 2008. I studied petroleum exploration units and as a proxy for reputation, I looked at the number of exploration areas the unit was awarded by the Norwegian authorities. We found strong reputational effects in terms of higher performance.

I also co-published a paper on why Porter did not include reputation as one of his drivers of value chain activities.

The reputation of the chair, independent directors and the board in general also tends to send strong signals about reputation. Causality is an issue as reputable firms seek out and/or attract the better directors.

Hello Fabrizo, in terms of financial indicators the question of Sales revenue, Sales Volume and Dividendes payed to shareholders is important - related to these EVA result and WACC are also used.

On another hand, if we consider these indicators and put some focus on quality policy and the question of non-conformty costs and rate of devolutions made by Clients, another good set of indicators are those related to the report of Quality Costs (f you want to stricktly stay in the field of financial indicators).

Best regards, 

Helena

I can just add also reputation of the company's chairman and managing director(s) and how their media effect in relation to discussion about industry and other issues related to their company and competitors. The reputation of the chair of the audit committee would add to the corporate reputation especially if he submit at the end of every a published report about the committee activities throughout the year. Finally, sometimes the reputation of the external auditor would also help to enhance corporate governance characteristics of the company.

Many thanks for your helpful suggestions

Try to search for corporate reputation index. If I not mistaken there is an organisation specialising in constructing the index. Tq

 Hi,

I addition to the above invaluable answers/recommendations, please read the below research papers to know more about the different measurement models of assessing corporate reputation:

http://www.sciencedirect.com/science/article/pii/S026323730300015X

http://jom.sagepub.com/content/20/1/1.short

http://www.emeraldinsight.com/doi/full/10.1108/10610429710175646

Good luck, Akrum.

 Hi,

I addition to the above invaluable answers/recommendations, please read the below research papers to know more about the different measurement models of assessing corporate reputation:

http://www.sciencedirect.com/science/article/pii/S026323730300015X

http://jom.sagepub.com/content/20/1/1.short

http://www.emeraldinsight.com/doi/full/10.1108/10610429710175646

Good luck, Akrum.

In addition to the intelligent contributions above, I will suggest good or sound Corporate Governance, Goodwill and Credit Ratings as part of the Non-financial indicators of corporate reputation. 

Dear Fabrizio Rossi

Greetings,

I think it is very important topic , please find the attached file many components of reputation may be sued and useful for you ,

Best Regards,

I believe operating margin (example Apple), growth rate, and annual market value added could be used for measuring the company's reputation. Regards, Mohammed

Hello, I would add brand value as an indicator to the above list. Regards, Andras

From the financial perspective, the reaction of market price of a company's stock to a bad new can be used to measure reputation.

All the above plus board structure and its functioning ,its effectiveness and adheren ubce to provisions regarding board composition should be taken for the said purpose

@ Ismaila Yusuf: What bad news are you referring in particular?

Our Central Bank used CAMELS structure for reputation management in the Banking Industry. It stands for Capital, Asset Quality, Management, Earnings, Liquidity, and Systems. From the Financial Perspective, it translates to Return on Capital( inclusive of human capital), Return on Assets ( least Non performing assets), Earnings ( return on equity), Liquidity ( current ratio).

The way the company discharges its duties towards society also matters to a large extent. Corporate Social Responsibility is an effective tool that synergise the efforts of corporate and the social sector agencies towards sustainable growth and development of societal objectives at large.Companies must try to enhance their reputation and profitability by making heir whole hearted contribution towards social progress. The success of CSR lies in practicing it as a core part of a company’s development strategy. of actionable plans.

@Fabrizio Rossi, see

Armour, John and Mayer, Colin and Polo, Andrea, Regulatory Sanctions and Reputational Damage in Financial Markets (October 2, 2015). Oxford Legal Studies Research Paper No. 62/2010; ECGI - Finance Working Paper No. 300/2010. Available at SSRN: http://ssrn.com/abstract=1678028 or http://dx.doi.org/10.2139/ssrn.1678028

A rather rough estimator of reputation (intrinsic versus extrinsic), take the book-to-market ratio -BTM (i.e.inverse of the P/B ratio). After normalization based on the average BTM for peers: 

• If the value is very much more than 1, it may be an indicator that the firm is undervalued ("low" corporate reputation: high intrinsic, low extrinsic)
• If the value is very much lower than 1, it may be an indicator that the firm is overvalued ("high" corporate reputation:high extrinsic, low intrinsic)

As in any measurement, reliability is best achieved when used as part of a battery of other measures. Such as size and other risks metrics. Also the reliability and comparability of the BTM is dependent on compliance to IFRS and the robustness of the capital markets (e.g. market efficiency).

mursalim

To add in summarised form would say;

(a) Financial performance indicators like return on assets (ROA) and return on equity (ROE).These are ratios

(b) Market indicators like Earnings Per Share (EPS) and market value of shares.If its a public company

(c)Levels of litigations and their nature

(d) Company philosophy e.g Production methods (use of green energies etc),Pollution control methods,Use of organic fertilisers (Farming operations)

Dear Fabrizio

A 2010 literature review article on measuring corporation reputation (with numerous metrics) is:

Article A Systematic Review of the Corporate Reputation Literature: ...

The following article articulates the challenges, pros and cons of single and multiple item corporation reputation indexes, of measuring corporation reputation:

Chapter Challenges in Measuring Corporate Reputation

And the following explores 3 streams of thought in measuring corporation reputation:

Article Corporate Associations in the Academic Literature: Three Mai...

Another take on corporation reputation is the recent article:

http://www.stakeholderslab.nl/wp-content/uploads/16363-64000-1-PB.pdf

1. Discretional social responsibility practices.

2. Good work environment

3. Generating positive feelings in people

4. Ethical enterprise

5. Good relation with consumers

6. Having good products and services

7. Leadership and innovation

http://www.scielo.br/pdf/rae/v54n1/a06v54n1.pdf

Would suggest a robust capture of Corporate Board gender diversity & inclusion.

Thank you for your suggestions. What about the managerial reputation indicators?