Recent Financial Analysis has finally been able to prove that your Corporate Reputation really is your most priceless asset
We’ve all read the cliches and quotes that tell us how important your reputation is, and how easy it can be destroyed.
Everyone’s done it.
From Socrates to Henry Ford to Warren Buffet to Richard Branson – they’ve all given us beautiful quotations about the importance of Reputation, without any facts whatsoever to support it.
But new research has identified the true value of Corporate Reputation for the first time.
And the conclusions are extraordinary.
The True Value Of Your Corporation Is Bigger Than You Ever Imagined
A series of recent studies have analysed all the components of Market Capitalisation on the S&P 500, the FTSE 100 and the FTSE 250 – and their findings are extraordinary:
- In their 2016 study of the S&P 500, Reputation Dividend found that Corporate Reputation accounted for a massive 21% of Total Market Capitalisation, or a staggering US$3,977 Billion of Market Value.
- In their 2016 study of the FTSE 250, the results were even more extreme, with Corporate Reputation accounting for 25% of Total Market Capitalisation – or £91 Billion of Market Value.
- In the same study, they found that Corporate Reputation accounted for an incredible 38% of Total Market Capitalisation on the FTSE 100 – creating £702 Billion of Market Value.
The results varied by industry and Stock Market – but in every case Corporate Reputation accounted for a dramatic proportion of Market Value.
On the S&P 500, Corporate Reputation accounted for more than 15% of Total Market Capitalisation in several Industries, including: Telecommunications, Oil & Gas, Financial, Technology and Industrials.
On the FTSE, the same sectors were equally influenced – as were Consumer Goods, Healthcare, Utilities and Consumer Services.
The study also found that an improvement in Corporate Reputation leads directly to an increase in Stock Price.
On the S&P 500, an 5% improvement in Corporate Reputation yields a 2.5% increase in Market Capitalisation. On the FTSE it creates an increase of 2.2% in Market Capitalisation.
That would result in an increase in Market Value of approx. US$600 million for the average-sized S&P 500 company, and US$500 million for the average-sized company on the FTSE.
How much of your company’s Market Value is created by your Corporate Reputation?
And are you doing enough to increase it?
Reputation is a Research and Strategy Consulting Firm that advises CEOs and Boards of Public Companies how to achieve Fair Valuation for their Company’s Stock.