The Impact of Stakeholder Power on Corporate Reputation: A Cross-Country Corporate Governance Perspective

TitleThe Impact of Stakeholder Power on Corporate Reputation: A Cross-Country Corporate Governance Perspective
Publication TypeJournal Article
Year of Publication2014
AuthorsSoleimani A, Schneper WD, Newburry W
JournalOrganization Science
Volume25
Issue4
Pagination991-1008
Date PublishedJul-Aug
ISBN Number1047-7039
Accession NumberWOS:000339159800002
Abstract

Corporate reputation has roots in national beliefs about the role of the business corporation in society; these beliefs are constructed in accordance with the preferences of powerful stakeholders. Building on a stakeholder-power approach to corporate governance, we investigate whether differences in the legal rights and protections of shareholders, creditors, and workers across countries affect the general public's reputation assessments of business corporations. Using a sample of 593 of the largest publicly traded companies in the world from 32 countries during 2007 to 2011, we find that in societies where shareholders enjoy a high degree of legal rights, the impact of stock market returns on corporate reputation becomes more positive. Likewise, the negative relationship between earnings volatility and reputation becomes greater when creditor rights are stronger. Contrary to expectations, we found no evidence of an interaction effect between labor rights and corporate social performance on corporate reputation.

DOI10.1287/orsc.2013.0889