Are High-Quality Firms Also High-Quality Investments?

Abstract

The relationship between corporate reputation and investment results is the subject of ongoing debate. Some argue that high-quality firms ultimately provide superior stock price performance; others counter that stock prices already reflect these firms' prospects for growth and profitability. This study advances the debate by providing fresh evidence that investing in high-quality firms yields above-average returns and that these superior returns continue for up to five years.

Keywords: corporate reputation, market efficiency, stock returns

JEL Classification: G12, G11, G14