The real value of reputation

February 2014

The corporate reputation of companies listed on the London Stock Exchange account for 911 billion pounds. This has more than doubled in the past four years, according to the seventh annual study published last month by intangible asset specialists, Reputation Dividend.

According to the study, the combined value of reputation across the FTSE100 and 250 grew by close to 108 billion pounds, an increase of 13 per cent in the year. Simon Cole, founder of Reputation Dividend, stated that

regardless of the fact that corporate earnings struggled to make much headway, the combined value of the index was up by 11% at the end of 2013. Investors may not necessarily have seen the profit growth they were hoping for but confidence, fuelled by stronger, more compelling corporate stories, continued to build and the recovery held steady. Corporate reputations proved to be one of the main drivers of market cap growth.”

Said reputation expert and director, Sandra Macleod, “there is a growing need and appetite for companies to be held to accountable for their reputations above and beyond delivery of financial performance and in a way that assures investors and stakeholders that sound management is in place. While communications budgets continued to feel the pinch last year, their impact was more significant than at any time since the downturn started. Communications leaders should take a lot of credit for building the value of the assets in their charge.The growing professionalism of the function and its impact on corporate decision-making paid dividends.”

The study also found that many reputations offer companies significant potential to increase shareholder value by focussing on the messages that matter most to investors which in 2013 became dominated by ‘growth’ characteristics. Perceptions of companies’ ‘ability to attract talent’ and ‘use of corporate assets’ are now the two most impactful characteristics, with messages relating to companies’ ‘ethical, community and environmental’ credentials starting to find traction for the first time in three years.

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