The Market Valuation of Firm Reputation

23 Pages Posted: 12 Apr 1999

See all articles by Ervin L. Black

Ervin L. Black

Steed School of Accounting

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

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

Ervin L. Black

Steed School of Accounting ( email )

307 W Brooks
Norman, OK 73019
United States
405-325-2401 (Phone)

Thomas A. Carnes (Contact Author)

Berry College - Campbell School of Business ( email )

2277 Martha Berry Hwy NW
Mount Berry, GA 30149
United States

Vernon J. Richardson

University of Arkansas at Fayetteville ( email )

401 WCOB
Fayetteville, AR 72701
United States

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