The Market Valuation of Firm Reputation

Black, Ervin L.; Carnes, Thomas A.; Richardson, Vernon J.

doi:10.2139/ssrn.158050

The Market Valuation of Firm Reputation

23 Pages Posted: 12 Apr 1999

See all articles by Ervin L. Black

Thomas A. Carnes

Berry College - Campbell School of Business

Vernon J. Richardson

University of Arkansas at Fayetteville

Date Written: March 1999

Abstract

We show that the intangible asset, firm reputation, has value-relevance as measured by its ability to explain part of the difference between BV and MV. Firm reputation is measured using the Fortune survey of "America's most admired companies." We allow the Fortune rankings to serve as a proxy for nonfinancial information, such as customer service and intellectual capital. We demonstrate this summary measure of nonfinancial information adds to market value, even after controlling for the financial performance halo effects on the Fortune ratings.

JEL Classification: M41, M44, O33, G12, G14, G29

Suggested Citation: Suggested Citation

Black, Ervin L. and Carnes, Thomas A. and Richardson, Vernon J., The Market Valuation of Firm Reputation (March 1999). Available at SSRN: https://ssrn.com/abstract=158050 or http://dx.doi.org/10.2139/ssrn.158050