The Price of Perception: Corporate Reputation in UK Worth L460 Billion

Accounting for taste, values and perceptions. CFO World UK has the story:

"Corporate reputation accounts for around £460 billion worth of value among the UK’s largest listed companies, according to a new index that highlights the importance of perception.

The reputations of some of the very biggest businesses in the country, including the likes of Royal Dutch Shell, Unilever and the BG Group, contributed almost 50 percent of overall shareholder value last year, research by Echo in collaboration with the brand consultancy Bestra suggests.

Meanwhile, companies whose reputation has been diminished in the past 12 months lost significant chunks of their market value, most notably the Yell Group, whose battered reputation is credited with being 45 percent of the reason for its stock falls.

On a sector by sector basis, oil and gas is identified as that in which a strong reputation translates most directly into market value, followed not all that closely by basic materials, health care and consumer goods.

Simon Cole, managing partner at Bestra UK, said: “On average, five percent improvement in the strength of a reputation will lead to an increase of 1.8 percent in market cap in FTSE100 companies and two percent in FTSE250 companies.”

The team behind the index reflect that effective reputation efforts were based around basic qualities during the depths of the recession in 2010 but are now increasingly focussed on being well placed for recovery and for future growth.

“With investors’ uncertainty having settled a little, it appears that factors such as ‘quality of management’ and ‘environmental responsibility’ are of increasing importance,” said Sandra Macleod, chief executive of Echo Research