A company's reputation doesn't translate to stock market performance
It turns out a company's reputation — good or bad — doesn't make much difference in the stock market.
The big picture: Results from the Axios Harris Poll 100, a new partnership between Axios and Harris Poll, found little difference between the performance of shares for the 10 companies that had gotten the biggest ranking improvements and those with the biggest ranking declines.
- In fact, the basket of 10 public companies that saw the largest ratings declines marginally outperformed the basket of 10 public companies with the largest ratings improvements in 2018 (-4.9% vs -5.6%).
What they're saying: "Shareholders care about reputation, only in regards to return," Brian Battle, director of trading at Performance Trust Capital Partners, tells Axios.
- Harris Poll CEO John Gerzema agrees, but says that in 20 years of the poll he's seen these things catch up with companies.
- "In any given year we don't expect to see financial performance and reputation move in lockstep because shareholder value is often not correlated with the public interest. So many companies — even sectors like FAANG — can take reputational hits and still grow, at least in the short term. But over time, they risk losing market value by not being aligned with changing societal tastes."
Methodology: The Axios Harris Poll 100 survey was conducted November through January in a nationally representative sample. One group, 6,118 U.S. adults, was asked to identify the two companies they believe have the best and worst reputations. Then, the 100 “most visible companies” were ranked by a second group of 18,228 adults across key dimensions of corporate reputation attributes.