Part V: Other Consequences of Corporate Reputation: Product announcements and corporate reputations
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Volume 1 Numbers 1 and 2
Part V: Other Consequences of Corporate Reputation It is often said that good reputations are powerful signals that can help a company get better ratings by analysts, enable premium product prices, and attract better employees. However, empirical evidence proving these assumptions is scarce. The New York conference provided contributions highlighting some of these eects. Do Corporate Reputations In¯uence Security Analyst Earnings Forecasts? An Empirical Study James J. Cordeiro, SUNY at Brockport Rakesh B. Sambharya, Rutgers University-Camden `Tough Talk' and Market Leaders: The Role of Overt Signaling and Reputation-Building Behaviors in Sustaining Industry Dominance Walter J. Ferrier, University of Kentucky Hitch your Corporate Wagon to a CEO Star? Testing Two Views about the Pay, Reputation, and Performance of Top Executives James B. Wade, Joseph F. Porac, Timothy G. Pollock, Department of Business Administration, University of Illinois at Urbana-Champaign James R. Meindl, State University of New York at Bualo Strategic Alliances and Firm-Based Legitimacy Paul Olk, University of California-Irvine Peter Smith Ring, Loyola Marymount University Product Announcements and Corporate Reputations Raghu Garud, New York University Joseph Lampel, St Andrews
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Other Consequences of Corporate Reputation
Do corporate reputations influence security analyst earnings forecasts? An empirical study James J, Cordeiro, State University of New York at Brockport Rakesh B. Sambharya, Rutgers University-Camden
INTRODUCTION We ®nd that security analyst ®ve-year earnings growth forecasts are related to both `®nancial ends' factors of interest to stockholders and to `capababilities and strategic means' factors of interest to other organizational stakeholders for 303 US ®rms in 1994±95. These ®ndings have implications for stakeholder management approaches and ®t in with the growing body of research that seeks to illuminate the linkage between corporate reputation and ®rm performance. Recently, there has been a surge of interest in investigating the usefulness of corporate reputation in helping ®rms secure competitive advantage (eg, Fombrun and Shanley, 1990; Brown and Perry, 1994; Fryxell and Wang, 1994; Fombrun, 1996). While the social processes by which reputations are jointly constructed by ®rms and their environments are also of potential interest, much less work has been carried out in this area. One of these social processes is signal refraction via institutional intermediaries such as security analysts, governmental agencies and consumer advocates specializing in the assessment of corporate performance outcomes (Fombrun and Rindova, 1994). This article develops and tests the hypothesis that security analysts Ð key players in the signal refraction process Ð use corporate reputation factors of interest to both stockholders, and (separately) factors of interest to other organizational stakeholders when
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generating their earnings performance forecasts. Data from 303 US ®rms in 1994 and 1995
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