Reputation effects company stocks.

Discussion in 'Cypress Bioscience' started by Anonymous, Nov 18, 2009 at 2:22 PM.

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  1. Anonymous

    Anonymous Guest

    <BusinessWeek>

    A more sophisticated understanding of the power of perception is starting to take hold among savvy corporations. More and more are finding that the way in which the outside world expects a company to behave and perform can be its most important asset. Indeed, a company's reputation for being able to deliver growth, attract top talent, and avoid ethical mishaps can account for much of the 30%-to-70% gap between the book value of most companies and their market capitalizations. Reputation is a big reason Johnson & Johnson (JNJ ) trades at a much higher price-earnings ratio than Pfizer (PFE ), Procter & Gamble (PG ) than Unilever (UN ), and Exxon Mobil (XOM ) than Royal Dutch Shell (RDS ). And while the value of a reputation is vastly less tangible than property, revenue, or cash, more experts are arguing it is possible not only to quantify it but even to predict how image changes in specific areas will harm or hurt the share price.

    Of course, spin alone can't create a lasting public image. A company's message must be grounded in reality, and its reputation is built over years. And if there is a negative image based on a poor record of reliability, safety, or labor relations, "please don't hire a PR company to fix it," says strategy professor Phil Rosenzweig of Switzerland's International Institute for Management Development. "Correct the underlying problem first." The biggest driver of a company's reputation and stock performance is, after all, its financial results, notes Rosenzweig, author of The Halo Effect, a book that details how quickly reputations can turn.

    Smarter communications can, however, help companies with good stories to tell. By most metrics, such as return on equity, profit growth, and product quality, companies like UTC, Southwest Airlines (LUV ), and United Parcel Service (UPS ) may compare well with top rivals. But unless the message gets through to Wall Street, their stocks may trade lower than they could.

    The trick is to decide where to focus amid dozens of factors defining a corporate image. As reputation expert Sandra Macleod of London's Echo Research Ltd. puts it, there are "threshold expectations" that every company must deliver and reinforce, such as good service and financial performance. Beyond that, priorities get fuzzy. Sure, it looks great to tell the world about your innovative culture or that you are the greenest company in your industry. But do these issues really move the needle with your target customers or investors?

    That's why companies are trying to get more scientific about reputation management. Many big companies now shell out $2 million a year on image research. This will be a tiny slice of the $4.2 billion spent on PR this year, but such research is growing fast
     

  2. Anonymous

    Anonymous Guest

    Online Reputation Protection Specialist

    JW Maxx Solutions is a leader in the field of online reputation management. We offer online reputation protection and online crisis management services. Protect your online presence with JW Maxx Solutions.
     
  3. Anonymous

    Anonymous Guest

    Re: Online Reputation Protection Specialist

    They'e been out of business for 3 years
     
  4. Anonymous

    Anonymous Guest

    A butterfly floating in Thailand can effect a company's stock.