Originally published in The Holmes Report, 25 May 2014
More Than 20 Percent Of S&P 500 Value Attributable To Reputation
The corporate reputations of companies listed on the New York Stock Exchange’s S&P500 account for close to $3.7 trillion in value, or 21 percent of total market capitlization, according to the seventh annual study published today by intangible asset specialist Reputation Dividend, which also found that the value of these corporate reputations has more than doubled in five years.
Analysts found that since the depth of the recession, 26 percent of America’s market capitalization recovery is directly attributable to the growth in reputation impact.
According to Simon Cole, founder of Reputation Dividend, “The recent optimism for the market’s upturn was strongly based on intangibles such as corporate reputation as financials struggled to deliver against expectations. We found that the total market capitalization of the S&P is $1.1 trillion higher due to professional management of reputation in the last five years.”
The survey also found that a 5 percent improvement in the strength of a company’s reputation could be expected to produce, on average, a 1.5 percent uplift in share price over the year. For the average sized S&P500 company, that equates to a $550 million uplift in market capitalization.
With Apple’s reputation sliding for the third-year running, the study placed Walt Disney as the top performer in terms of reputational contribution for 2013, followed by Apple, Google, Exxon Mobil, Occidental Petroleum, Chevron, Caterpillar, International Paper, Qualcomm, and Comcast.
Says Reputation Dividend’s Sandra Macleod, “Reputation is material for organizational success. Studies such as this quantify how it continues to be a major driver of corporate value, and show precisely where focus is needed to support investor sentiment and ultimately, the market’s trust in future performance.
“They also serves to underline the importance of including reputation among a company’s risk priorities. As the economy continues to recover, we expect to see intangibles making a deeper inroad into decision-making and overall shareholder value.”
See more at: http://www.holmesreport.com/expertknowledge-info/14999/More-Than-20-Percent-Of-SP-500-Value-Attributable-To-Reputation.aspx
Summaries of the reports can be downloaded here: